India is in the process of getting infrastructure ready for a digital transaction push, with lack of spectrum availability being its key constraint, sources quoted an RBI team telling the Public Accounts Committee (PAC) on Friday. RBI officials told the panel that the system was getting ready for digital economy as PAC members questioned the digitisation process and push for cash-less economy.
“They admitted that there is much to improve and the main issue cited was the lack of infrastructure, especially availability of the spectrum. They said there were also issues of non-availability of swipe machines,” said a source. The team assured the panel that a mechanism was being worked out to bring down transaction costs for online payments and that cash flow in urban as well as rural areas had improved significantly.
RBI Governor Urjit Patel, who appeared before the parliamentary panel along with his deputies R Gandhi and S S Mundra, could not answer all the questions raised. The RBI officials chose not to reply to significant questions like who decided to demonetise Rs 500 and Rs 1,000 notes, the time required to bring back normalcy and how much old currency had returned to banks. The standard response of the officials in writing was “the government may frame a suitable reply”.
India is in the process of getting infrastructure ready for a digital transaction push, with lack of spectrum availability being its key constraint, sources quoted an RBI team telling the Public Accounts Committee (PAC) on Friday. RBI officials told the panel that the system was getting ready for digital economy as PAC members questioned the digitisation process and push for cash-less economy.
“They admitted that there is much to improve and the main issue cited was the lack of infrastructure, especially availability of the spectrum. They said there were also issues of non-availability of swipe machines,” said a source. The team assured the panel that a mechanism was being worked out to bring down transaction costs for online payments and that cash flow in urban as well as rural areas had improved significantly.
RBI Governor Urjit Patel, who appeared before the parliamentary panel along with his deputies R Gandhi and S S Mundra, could not answer all the questions raised. The RBI officials chose not to reply to significant questions like who decided to demonetise Rs 500 and Rs 1,000 notes, the time required to bring back normalcy and how much old currency had returned to banks. The standard response of the officials in writing was “the government may frame a suitable reply”.
The response was the same to questions about objectives laid down for demonetisation, quantum of black money recovered and whether the government realises virtual paralysis of economy as a result of the move. “It is a matter of fact that it was a unanimous decision,” the team responded to a question on whether the demonetisation proposal was a unanimous decision of the RBI Board. The RBI submitted over 200-page document addressing questions related to the monetary policy and demonetisation.
PAC chairman K V Thomas said the panel has given the RBI 15 days to send its detailed replies. He added that it will summon the governor again if necessary. In his opening remarks, Thomas pointed out that it could imply that demonetisation was the RBI’s brainchild since its autonomy is “zealously” protected by the RBI Act. He added that “no one, including the highest authority of Government of India, can claim any credit or otherwise for the decision or the consequences of such decisions”. Thomas said that the RBI should have analysed the implications of the decision. He asked whether the RBI has had any discussions to find out whether the decision encroaches upon the right to property of individual citizens. Thomas referred to reported deaths during the demonetisation process, too.
Sources said that BJP members objected to Thomas’s focus on demonetisation as the team was called for monetary policy review. There were some heated exchanges. BJP’s Nishikant Dubey disagreed with Thomas’s focus on demonetisation in his remarks . “The conduct of monetary policy functions by the RBI under the RBI Act is different from the action taken by the government for withdrawal of legal tender character of Rs 500 and Rs 1,000 bank notes under a different provision of the Act,” Dubey said. He cautioned against asking questions about sensitive financial policy decisions ahead of the budget.
Biju Janata Dal’s B Mahtab agreed that the discussion should focus on monetary policy and demonetisation could be a part of it. But Thomas quoted RBI’s note and said that demonetisation had a deep impact on the monetary policy and the panel had the right to discuss it.
The panel highlighted hardships that non-resident Indians and people in neighbouring countries like Nepal were facing because of demonetisation.
Patel agreed to examine the proposal when BJP MP Shivkumar Udasi suggested that the RBI could set up a committee to study behavioural changes in people relating to monetary transactions. BJP’s Anurag Thakur wanted the RBI to look into discrepancies in transactions in cooperative banks post-demonetisation.
Source: indianexpress.com