PAC seeks answers from RBI governor on absurd questions on demonetisation
21 January 2017
The Public Accounts Committee (PAC) of Parliament, after failing to extract the answers it sought from RBI governor Urjit Patel on specific questions related to the demonetisation drive, on Friday asked him to furnish written replies to the various concerns expressed by the members within two weeks and appear before the panel again.
During the questioning, Congress members of the PAC had sought answers to embarrassing questions like what compensation the RBI proposes to give those who died while standing in the queue at ATM counters.
The meeting saw a political altercation between BJP members and committee chair and Congress MP K V Thomas who set the tone for an acrimonious discussion. Listing the hardships due to the demonetisation drive he said the public had suffered and asked Patel if the central bank would compensate for the death of 100 people waiting at ATMs for cash.
While Patel sat through the political upmanship, BJP members sprang to his defence, with Hamirpur MP Anurag Thakur asking whether the central transport minister could be held responsible for deaths on a state highway. Another BJP MP, Nishikant Dubey, suggested that Patel need not delve into any area outside of monetary policy, Thomas, finding himself under concerted fire from BJP members, then turned to BJD leader Bhartruhari Mahtab.
The governor also was asked about who initiated the note ban and for what specific purpose.
The governor, along with deputy governor R Gandhi and other senior functionaries, appeared before the panel and answered questions on the conduct and progress of the demonetisatin exercise, but did not give answers to questions like who initiated the note ban and the compensation for ''queue deaths'' at ATM counters.
Unsatisfied with the responses of Reserve Bank of India (RBI) Governor Urjit Patel to such specific queries on demonetisation, the PAC asked him to give answers to all their questions in writing.
Patel said there may be problems but ''we will overcome them.'' He also said the demonetisation drive is outside RBI's monetary policy.
"The conduct of monetary policy by RBI under the RBI Act is different from the action taken by the government for withdrawal of legal tender character of Rs 500 and Rs 1,000 banknotes under a different provision of the Act," the central bank told the committee in a written statement.
The RBI said the old series of Rs500 and Rs1,000 notes was cancelled effective midnight on 8 November by the government on receiving the central bank's recommendation.
Patel faced some tough questions from the Trinamool representative, who said he was disappointed by the governor's answers.
Congress presence was depleted, with only Bhubaneshwar Kalita present at the meeting. He is understood to have pressed the governor to reveal how many of the demonetised notes had been deposited.
On questions relating to interest rates, Patel said the policy rate of 6.25% was arrived at keeping in mind inflation and international factors like Brexit and the US election.
He defended banking restrictions as reasonable and responsible, saying they had been made with the intention to protect public interest and based on past cash utilisation. Patel insisted that demonetisation did not violate the right to trade and said the RBI had honoured, "value for value", each 'specified bank note' that was deposited.
BJP MP Kirit Somaiya critcised the PAC secretariat for framing questions that seemed to treat RBI officials as criminals who were being cross-examined in a court of law. He said the RBI had done a great job post-demonetisation.