Where is the RBI Governor?
It has has been almost two weeks since Prime Minister Modi announced his government’s decision to demonetise the Rs 500 and Rs 1000 notes. In the meantime, millions of Indians have lost precious work hours as they queue up at banks to exchange their old notes or withdraw new notes from ATMs. Vast sections of the working class have suffered enormously, as their wage payments have been delayed due to shortage of the new currency. There is a lack of banking facilities in the countryside, leaving farmers in the lurch during the sowing season for Rabi crops. Farmers are unable to pay for seeds, fertilisers and labour. With the transport sector hit, the supply of commodities across the country has plummeted. Industrial cities like Tirupur and Surat have come to a grinding halt. Although the Opposition has come out all guns blazing, there is a lack of a coherent and united front against the government’s poorly-implemented decision. The Centre was clearly not prepared to meet the fallout from demonetising 86 per cent of all currency in circulation. Many ATMs have not been recalibrated to dispense the new Rs 500 and Rs 2000 notes. However, there has been one prominent figure, who has remained virtually absent over the past two weeks amidst the financial chaos. The newly-appointed Reserve Bank of India Governor Urjit Patel’s near silence on the subject has been troubling. Besides issuing several notifications dealing with cash withdrawal limits, the head of India’s main regulatory body that oversees monetary policy, has said or done little to communicate the government’s plans and assure citizens. The RBI has been so unprepared to deal with the fallout of ‘demonetisation’ that it had to reintroduce soiled notes into circulation to meet the rising demand for new notes. Instead of the RBI Governor, it is Economic Affairs Secretary Shaktikanta Das, who has been seen communicating with the media on the subject. Under the previous governor, Raghuram Rajan, the RBI exercised some autonomy when dealing with monetary policy. There are even provisions in the Reserve Bank of India Act that ensure a level of independence for the Central bank from excessive government interference. Admittedly, the RBI must take the government’s suggestions into consideration when determining policy. However, in this case, the RBI Governor seems to have just rolled over. It is little surprise that banking associations have demanded Patel’s resignation. Rajan would have never consented to such a move.