New Delhi: The RBI board, which included the present Governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on the country’s economic growth and observed that the unprecedented move will not have any material impact on tackling the black money menace.
The board, according to minutes of the meeting revealed by the central bank in an RTI reply, had met just two-and-a-half hours before Prime Minister Narendra Modi in an address to the nation announced the demonetisation decision on November 8, 2016.
Curbing black money was one of the prime objectives of the shock move to junk old Rs 500 and 1,000 notes, which saw 86 per cent of high value currency going out of circulation.
The minutes of the crucial board meeting, which approved the government’s request for demonetisation, recorded the presence of the then RBI Governor Urjit Patel and the then economic Affairs Secretary Shaktikanta Das.
Others at the board meeting included the then Financial Services Secretary Anjuli Chib Duggal, and RBI deputy governors R Gandhi and S S Mundra. Both Gandhi and Mundra are not part of the board now, while Das was appointed as the RBI governor in December 2018.
“It is a commendable measure but will have short-term negative effect on GDP for the current year,” as per the minutes posted by RTI activist Venkatesh Nayak on the website of Commonwealth Human Rights Initiative.
“Most of the black money is held not in the form of cash but in the form of real sector assets such as gold or real estate and that this move would not have a material impact on those assets,” the board observed in its 561st meeting held in Delhi.
The prime minister had announced demonetisation of high-value currency notes with the aim to curb the black money, check counterfeit currency and stop terror finance among others.
While any incidence of counterfeiting is a concern, the minutes said, Rs 400 crore as a percentage of the total quantum of currency in circulation in the country is not very significant.
Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, notes worth Rs 15.31 lakh crore came back during the 50-day window for depositing junk notes given to resident Indians and till June 2017 for non-resident Indians. (PTI)
