Now, it is established that the demonetisation was introduced ignoring the warnings of the Reserve Bank of India. Ahead of Prime Minister Narendra Modi was about to make this surprise announcement, the RBI board, which had its present governor Shaktikanta Das as a director, had warned of short-term negative impact of demonetisation on economic growth.
This was revealed after two and years, as a response to an RTI enquiry. Just two-and-a-half hours before Modi’s announcement on November 8, 2016, the RBI board had observed that the unprecedented move will not have any material impact on tackling the black money menace.
It may be recalled that according to PM Modi’s announcement, 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.
“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.