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Modi government has misled the Parliament on demonetisation: Opposition

Charu Kartikeya | Updated on: 11 January 2017, 18:24 IST

It is strange that the government is so proud of demonetisation that every second day it fields senior ministers to extol its virtues. And yet, it is running shy of owning up the decision.

The RBI's latest admission that it recommended the scrapping of Rs 500 and Rs 1,000 notes after the Centre asked it to do so, contradicts the government's stand on the issue so far.

The central bank has told the Parliament's Standing Committee on Finance in a written note that the government conveyed its advice on 7 November and central board of the RBI concurred with it on 8 November.

However, the government had said in Parliament, during the Winter Session last month that the move was an RBI decision.

Power Minister Piyush Goyal had said in the Rajya Sabha on 16 November that "the RBI Board took this decision. It then sent it to the government which praised it and the cabinet then gave its approval."

Passing the buck

The attempt, inside the Parliament, was to put the onus of demonetisation on RBI's shoulders with a possible two-pronged objective. One, make it look like an independent decision by a semi-autonomous institution and two, to keep a scapegoat ready in case the exercise was botched up.

However, it was clear from the beginning that even if it was the RBI that had initiated formal communication on the issue, this was essentially a political decision.

The RBI did not announce it. It was Prime Minister Narendra Modi who suddenly addressed the nation on national TV and announced the decision. BJP leaders and spokespersons have been singing paeans to the PM ever since, saying this sort of a bold decision could have only been taken a by a strong leader like Modi.

Opposition parties have been claiming since the beginning that Modi took this decision unilaterally and only asked RBI later to do his bidding.

Did the government mislead the Parliament?

The Opposition is now saying that since the truth has tumbled out because of the RBI's note, it is clear that the government tried to mislead the Parliament on the issue, which is a serious charge.

CPI(M) MP (Lok Sabha) Mohd Salim told Catch, "From the very beginning, demonetisation was shrouded by suspicion and the government was offering no clarity on the process and reasons behind the move. It has now been clearly established that ministers of the union government deliberately sought to mislead the Parliament and the accountability for this act will be sought, particularly by the members of the Rajya Sabha."

RJD spokesperson Manoj Jha also agreed and noted, "This is indeed a case of misleading the Parliament and had us scared about institutional health and credibility. I think this singular act in itself shows that important institutional procedures and practices could be sabotaged to justify the 'Dilli to Daulatabad' syndrome."

Concerns over RBI's autonomy

The issue has also ignited a debate over the impact of the incident on the autonomy of the RBI. Former RBI governor Y V Reddy reportedly said that the role of RBI is under threat and that it has to be addressed as a national problem.

Without specifically referring to demonetisation, Reddy said he suspected that the bank's institutional identity had been damaged and that a reputational risk was the worst risk for a central bank.

Another former RBI governor has also spoken out on the issue. Bimal Jalan too did not make an open reference to the note-ban but pointed out nevertheless that RBI's autonomy was fundamental and it should be maintained.

Economist and a former member of RBI's central board, Indira Rajaraman, noted that the RBI Act's provisions have been disrespected and "no attempt was made to at least show that the initiative for such an action came from RBI".

First published: 11 January 2017, 18:24 IST
Charu Kartikeya @CharuKeya

Assistant Editor at Catch, Charu enjoys covering politics and uncovering politicians. Of nine years in journalism, he spent six happily covering Parliament and parliamentarians at Lok Sabha TV and the other three as news anchor at Doordarshan News. A Royal Enfield enthusiast, he dreams of having enough time to roar away towards Ladakh, but for the moment the only miles he's covering are the 20-km stretch between home and work.