‘Shame on RBI’ says Chidambaram after central bank admits #Demonetisation a failure

‘Shame on the RBI’ tweeted former Finance Minister P Chidambaram reacting to RBI’s admission on Wednesday that just about 1% of demonetised currency did not return to the banks

Photo by Sonu Mehta/Hindustan Times via Getty Images
Photo by Sonu Mehta/Hindustan Times via Getty Images

NH Web Desk

Reserve Bank of India’s Annual Report released on Wednesday triggered outrage following admission by the Central Bank that only about one per cent of the demonetised currency failed to return to the banks. The admission calls the bluff on the Government’s claim that Demonetisation wiped out a large volume of black money from the economy.

Both political parties and politicians tweeted their frustration over the disclosure, derisively asking the Prime Minister and the Finance Minister to explain where the black money had gone. Some wondered whether Demonetisation was an exercise to make black money into white

Former finance minister P Chidambaram in a series of tweets blamed the RBI for recommending “ Demonetisation” and sarcastically added that the economists deserved a Nobel.

RBI ‘gained’ ₹16000 crore, but 'lost' ₹21000 crore in printing new notes! The economists deserve Nobel Prize.

Samajwadi Party leader and Rajya Sabha member Naresh Aggarwal told National Herald that he plans to move a privilege motion against RBI Governor Urjit Patel. “In the next parliamentary standing committee on finance meeting, I’ll raise the issue as the RBI kept the country in the dark over demonetisation and misled Parliament.”

Photo by Kunal Patil/Hindustan Times via Getty Images
Photo by Kunal Patil/Hindustan Times via Getty Images
RBI Governor Urjit Patel

RBI’s admission that it spent ₹21,000 Crore to print fresh notes also came in for sharp criticism.

The central bank in its report conceded that the GDP growth moderated due to ‘waning business confidence’ and ‘ flagging entrepreneurial energies’. It also admitted that the Services sector decelerated and construction and real estate sector was hit by demonetisation. There was also deceleration in consumer durables, manufacturing and mining.

RBI, however, put up a brave face and said that due to Demonetisation there was improvement in household savings; the report also mentions that during the year government and public consumption increased, fuelled by pay hikes.

An interesting highlight of the report is that during the year the percentage of ₹1, ₹2, ₹5, ₹10 and ₹20 currency notes in circulation, which constituted 55% of the total currency in circulation came down to just about 7% in March, 2017.

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