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Despite former RBI Governor Raghuram Rajan’s warning, Govt. demonetized currency overnight

Despite former RBI Governor Raghuram Rajan’s warning, Govt. demonetized currency overnight

New Delhi: Raghuram Rajan, Former Governor of Reserve Bank of India (RBI) has made a revelation that he never favoured demonetization as its short term economic cost would outweigh any long term benefit.

This disclosure was made by Mr. Rajan in his latest book, “I do what I do”. This book is the compilation of speeches delivered by him as RBI Governor.

According to the report published by Hindustan Times, he said, “At no point during my term was the RBI asked to make a decision on demonetization”. This statement ends the speculation that the preparation for demonetization was started months before the announcement of the decision on 8th November.

In an interview, former RBI chief said that he had warned the Central Government about the impact of demonetization of Rs. 1000 and Rs. 500 currency notes overnight. He had also proposed alternative move to fight against shadow economy, TOI reports.

It is also reported by TOI that Mr. Rajan has written in his book which is set to release next week that in February 2016 for the first time, he expressed his thoughts orally. Later, the central bank had written to the Central Government about the time needed to prepare for demonetization.

It may be mentioned that Mr. Rajan after completion of his term on 5th September 2016 returned to the School of Business at the University of Chicago where he is a faculty member.

Read also: RBI Report: 99% of demonetised currency returned to banking system

RBI report on demonetization

On Wednesday, RBI, revealing the low efficacy of last November’s demonetization of high-value currency, said that of the Rs 15.44 lakh crore of notes taken out of circulation, Rs 15.28 lakh crore, or almost 99 per cent, had returned to the system by way of deposits by the public.