There is a fresh controversy over decision of demonetization taken by Modi government. According to a RTI, there was a meeting between Modi government and RBI prior to applying demonetization.
This was RBI’s 561st meeting of its central board of directors which included governor Urjit Patel and present governor Shaktikanta Das. Despite all of them refusing for this decision, government imposed demonetization.
Actually, before implementing demonetization the government said that it will help in controlling black money. RBI’s board of directors had said that most of the black money is not in cash. This point was proved when report suggested that most of the demonetized money returned to banks.
Government also claimed that this will help in catching fake currency and promoting e-payments. People usually keep their black money in the form of real estates. After demonetization people also started ‘converting’ their cash into gold and property.
Government had given logic that during year 2011-12 to 2015-16 there was an expansion of economy by 30%. However, there was an increase Rs 500 notes by 76% and of Rs 1000 notes by 109%. RBI has said that the mentioned growth rate of the economy is at real rate whereas the progress in the currency in nominal.
However, Modi government didn’t paid any heed to logics given by RBI and implemented demonetization. Various reports came which suggest that black money and terrorism remain unaffected by this decision. RBI itself exposed that 99.5% of demonetized currency came back. Now, question arises that what was the reason that government implemented demonetization?
