There is no doubt now that the demonetization of Rs 500 and Rs 1000 notes has been handled poorly by Prime Minister Narendra Modi and his team, but what is worrying is the question raised on the Reserve Bank of India (RBI) even by former Prime Minister Manmohan Singh who has also been the apex bank’s Governor in the past.
Prime Minister Narendra Modi may ignore criticism of the government’s handling of the demonetization of Rs 500 and Rs 1000 notes from different quarters, but he would do well by taking serious note of the concerns raised by his predecessor Manmohan Singh in the Rajya Sabha today.
He has rightly pointed out: “It is no good that every day the banking system comes with modification of the rules, the conditions under which the people can withdraw money. That reflects very poorly on the Prime Minister’s office, on the Finance Minister’s office and on the Reserve Bank of India. I am very sorry that the Reserve Bank of India has been exposed to this sort of criticism which I think is fully justified.”
Whether RBI Governor Urjit Patel is right in keeping himself away from the media glare on the handling of demonetization or not, may be a matter of debate, but there is no doubt that the way things have been handled do raise questions about the planning and execution of the move by the prime minister’s office, finance ministry and the RBI.
What is worrying is the fact that subjecting RBI to criticism is dicey and it may adversely impact the confidence of the people in the handling of currency operations by the central bank.
It is also not a good idea to give a feeling that the RBI will agree to do everything that the government wants in terms of policy measures.
PM Modi, therefore, must prepare a national plan quickly to address the concerns of the people along with the strategy to deal with those who have found innovative ways to turn their unaccounted money that was in Rs 500 and Rs 1000 notes, into white, and present it in Parliament to counter Manmohan Singh’s criticism that ‘the way this scheme has been implemented is a monumental management failure, and in fact, it is a case of organised loot, legalised plunder of the common people’.
Running away from this will only add to the problems as 90% of the people in the country are working in the informal sector and the move has also impacted agriculture considerably.