So far, the demonetization was interpreted as a technical misstep secretively designed by the bureaucracy inside the Ministry of Finance. But for the first time, the central bank Governor has uttered some words about the role of RBI in the process.
Speaking after the monetary policy declaration by the RBI, Mr Urjit Patel who kept an uncharacteristic silence about the event so far, pointed out that the decision was well planned and was taken without haste.
“The consequences that have emanated from that were taken on board. That is why the planning, the process and implementation was what it was, keeping in mind high secrecy has to be maintained. The central bank and the government were conscious of certain immediate difficulties for the public at large and all efforts were made to mitigate them.”
The RBI Governor simplified the impact as just ‘certain immediate difficulties for the public’. Besides he never touched the potential loss of growth momentum due to demonetization.
Interestingly, the monetary policy statement of the RBI continues to keep a studied silence about either the logic or planning side of demonetisation. As an official document, it doesn’t shares Patel’s individualistic claim about the RBI’s participation.
The document uses the word withdrawal of Specific Bank Notes (SBN) in place of demonetisatioin. Absence of any plan or any calculations about demonetisation in the official document shows that there is less participation from the part of the central bank.
Here, it seems that both the Governor and the Document speaks in two voices.