Mr.
Chairman, Sir, all the important points have clearly been mentioned here by the
hon. Members. At this juncture, I would like to link the monetary policy
with demonetization. Even though I am not an expert on banking matters, with my
limited knowledge I view the subject matter in this
way. As I understand, the monetary policy document, which has
already been circulated to us well ahead this time, makes two things very
clear. One is that the objective of the monetary policy will be to target
inflation within a band of two to six per cent, and secondly, effective
monetary policy transmission is a prerequisite for the monetary policy to
achieve its objective. One of the challenges with effective transmission has
been that the banking system operates in a liquidity-deficit mode which the RBI
intends to shift to a (140) liquidity-neutral mode.
One of the factors behind this persistent liquidity deficit has been the surge
in cash usage in (160) this country in the economy
even while deposit growth has been subdued. Actually, this concern has been flagged
off by the previous RBI Governor and also the SBI Chairman, Shrimati
Bhattacharya. Thus, growth in cash usage can be a serious impediment to
fulfilment of RBI’s monetary policy objective.
About
the legality of the Government action, let me give my strain of thought
on that. The growth in cash usage could well have been a
concern of the Central Board of the RBI in its recommendation to the
Government to declare Rs.500 and Rs.1000 notes to be no longer legal tender.
The Government acted in accordance with section 26(2). All the hon. Members
have already made this idea clear.(280) Section 26(2) of
the RBI Act states, “On recommendation of the Central Board, the Central
Government may, by notification in the Gazette of India, declare that with
effect from such date as may be specified in the notification, any series of
bank (320) notes of any denomination shall cease to
be legal tender.” As for the question of whether recommendation of the Central
Board itself followed any advice of the Government, Section 7(1) of the Act
states, “The Central Government may, from time to time, give such
directions to the Bank, as it may after consultation with the Governor of the
Bank, consider necessary in the public interest.” I conclude those viewpoints
after reviewing of the monetary policy document. So, the above analysis brought
out by me suggests that the RBI Act envisages a process of two-way consultation
between the Government and (420) RBI without any one
party unilaterally instructing the other. Thus, the Government may have been
persuaded by its own concerns of black money, counterfeit notes, terror
funding, corruption etc., give directions to the bank on demonetization as per
Section 7 and the RBI may have weighed its own concerns like challenges to
monetary policy transmission in its recommendation to the (480) Government
on demonetization as per Section 26, following which the Government made
that declaration again as per Section 26. I think this is the background
of the whole thing which has resulted in the policy decisions on
demonetization and after that digitization also has become a factor to be
reconciled with. We have all heard about what has been happening after
this. My question to the respected RBI Governor is, what is the action mooted
by the RBI(560) to track the black money that had sneaked back into
the financial system? There have been several reports on
that. I do not know whether I can ask this question. What are the
improved security features of the new currency notes to prevent counterfeiting?
If it does not violate the security reasons, you need not divulge this information.
If it does not, we would like to know about it.
Digital India is
our dream; it is the dream of the people. (640) For
instance, in a small country like Kenya, about 90 per cent of the
youth are using e-currency systems. Several countries are using this. In a
great country like India with all its potential of IT
industry, we should make use of digital systems here also. (700) We
all know about certain things which have already been conveyed very
clearly, like shadow economy or parallel economy that has prevailed. How far is
the RBI able to control that shadow economy which has been eating the
vitals of the economy of the country so far? Tax evasion is universal in India.
How far has the tax evasion been curbed by the process which has been mooted by
the RBI? We all know that transparency in financial transactions is a
myth in India. How far has this new digitization process helped in
exposing corrupt transparency in all financial transactions in the country? Of
course, we all know that this is a bitter brew. (800) Hon.
Prime Minister himself told this to the country that after a waiting period
of 50 days there would be good results. So, it is a bitter brew
but it will be sweet soon. It is becoming already sweeter. People
have (840) adjusted to this. I salute my countrymen
for their resilience and for taking it in their stride and seeing that
something good is happening in the country for the first time. I would
like to put a few more questions to the RBI Governor. Everybody has got
apprehensions about the issue of the needs of rural people being addressed. How
far have those needs been taken into consideration? Banking connectivity
in the rural areas is quite poor, as all of us understand. India Post is
functioning under the Banking Act and the network of India Post should
have been made use of by the RBI to ensure better connectivity and better
facility for financial inclusion of the rural people. (960) This
could have been facilitated by using about 136 lakhs post offices
working in this country. It is a huge (980) facility which
could have been put to use in such a time when there was financial
crunch in the beginning. The BhIM app has been designed by the Government
of India and RBI has played a key role in that. I congratulate them for
that. It will become a universal application of India. We
will not have to pay commission to America by way of Visa Card
usage or to China by using PayTM or to some other country. India has
already designed the RuPay Card and now there is BhIM app. How far
has the RBI been successful in promoting BhIM app not only to the urban people
but also to the rural people in this country? It could also be a
good remedial step.
I
feel that somewhere something is happening and that could be a phenomenon.
From media reports, (1120) I find that somebody is
trying to sabotage the good intentions of the Government of India, especially
some banks. I read some reports that some kind of sabotage or some
hand is working behind this. For instance, some unwholesome
activities are taking place between the banks. I found that
rich men got a lot of new currency of the denomination of Rs. 2000 in their
hands. How is it possible? It means there are some lacunae
somewhere. That has to be looked into by the Reserve Bank
of India. I would say that the people in the
country at large believe that demonetization is the right tool to end corruption,
black money and fake notes and the first step in a far-reaching transformation
in the functioning of our economy, bureaucracy, and of course, political
parties also.(1260) So, this is a brave decision
taken by the hon. Prime Minister. We will have to support it heart
and soul.(1280) As mentioned by the hon. Members here and
as mentioned in media reports also, all of sudden there was a big
infusion of deposits in Cooperative Banks. Deposits to the tune of
six-fold took place in Cooperative Banks all over the country in four
days after the note ban was announced. This is something fishy. The
Reserve Bank of India must deeply examine what went wrong and how it
happened in Cooperative Banks which are people’s banks. I am sure
somewhere some mischief has been played by somebody. Even the Chief
Justice of the Supreme Court had a doubt over the whole system but the
people of India did not have any doubt at
all.
Finally,
some people also mentioned in media (1400) that
counterfeit notes circulated by Pakistan are not an issue at
all. But I dare say that it is a big
issue. Pakistan has made use of fake
notes to destabilize the Indian economy. There are proofs of it because (1440) I
am also a Member of the Committee on External Affairs. The
country’s economy was undergoing a devastating effect caused by fake notes
brought by terrorists. So, there is a background material linking
monetary policy with demonetization brought out by the Government of India.
Let us go by this good decision of the Government and let us follow in
the right stride and see that India becomes a strong economy.
The whole world is looking at India; the whole world is curious about how
things are happening in this country. Let us see that RBI’s hands are
strengthened to see that everything goes very well in this process. (1548)
To access this
dictation exercise on YouTube, please follow the links given below:
