Echoing former Reserve Bank of India (RBI) Governor Y.V. Reddy, former Union Finance Minister P. Chidambaram said on Saturday that demonetisation has put the central bank’s reputation at great risk.
Asked whether the apex bank’s autonomy was over or not, he said, “On this issue, the answer is yes.”
Explaining his remark, Chidambaram said: “Reversing the sequence stipulated in the act… instead of Reserve Bank recommending withdrawal of legal tender status for the currency, the government is recommending to the Reserve Bank that legal tender status should be taken away.”
Recalling the build up to the November 8 announcement by Prime Minister Narendra Modi, the former Finance Minister said: “That was on November 7, the Reserve Bank board was called. Was there a written notice? They would not tell us.”
“How many people attended, they would not tell us. Was there an agenda paper for the meeting? Were there minutes of the meeting, they would not tell us. How long the meeting lasted, they would not tell us,” he said.
“I have information the meeting lasted for 30 minutes and the recommendations were made to the government. The Cabinet was waiting for the recommendation,” he explained.
“How could the cabinet know that the RBI will recommend the withdrawal of legal tender status? It was a command performance,” he said.
Echoing Reddy, Chidambaram said: “And to that extent, in this instance, the Reserve Bank’s reputation has been put at a great risk, the point which Governor Reddy made.”
The senior Congress leader also said that he would have resigned if demonetisation was implemented in his tenure as Finance Minister.
In the last 50 years, no major economy has demonetised its currency. India has been added to the list that includes Zimbabwe, North Korea and Libya, Chidambaram said, adding that demonetisation was a terrible decision and terribly implemented.