''UPA government also proposed it, we said no''

''UPA government also proposed it, we said no'': K.C. Chakrabarty, who was deputy governor of Reserve Bank of India (RBI) between June 2009 and March 2014, said that there was no economic rationale behind the ongoing demonetisation drive and that...

"Was it a formal proposal? What was the reason for declining it?

Whether it came officially or over telephone, is not the issue. But I definitely remember it had come. We said ‘no’ because it does not serve any purpose… the cost is high and the benefit is less."

UPA’s demonetization proposal
This refers to Manojit Saha’s story “UPA government also proposed it, we said no” (The Hindu, Interview/KC Chakrabarty, November 18). The former Deputy Governor ‘definitely remembers it (proposal to demonetize high value currency in India) had come’ and ‘We (KC Chakrabarty) said ‘no’ because it does not serve any purpose…’. For Chakrabarty, ‘Whether it came officially or over telephone, is not the issue.’
Answering the previous question, Chakrabarty says, ‘Yes, it(demonetization proposal) had come from the UPA government. After examining the proposal, we had said that this should not be done. The proposal never went to the board level.’ A proposal of this gravity is mooted over the telephone. The Deputy Governor who receives the call ‘examines’ it and says ‘no’. God save GOI and RBI.
This is indicative of the perception about the working of GOI and RBI, Chakrabarty maintained during his tenure as RBI Deputy Governor. What all happened to him (stripping of almost all portfolios held by him for a long period) and RBI staff (He meddled with RBI’s HR policies relating to recruitment- Chakrabarty was the architect of recruitment of ‘Executive Inters’ for short term experiment which failed- to retirement-he misinformed GOI about RBI pension scheme which resulted in RBI retirees losing the benefit of pension revision after 1997) is history.
M G Warrier, Mumbai

Blog Post No. 2430


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