Former RBI Governor Bimal Jalan Questions Note Ban Timing, Secrecy

New Delhi: Former RBI governor Bimal Jalan has questioned the timing and secrecy of the government’s decision to demonetise Rs 1000 and 500 notes.

Jalan was RBI governor from 1997 to 2003, coinciding with the first NDA government of Atal Bihari Vajpayee.

Questioning the timing, Jalan in an interview with The Indian Express said that there needs to be a good reason to make such a move.

"When you demonetise a legal tender, there must be a very good reason to do it. War, security threat. What demonetisation does is to give, as it were, a message to people that this government will not tolerate black money. The second part, which is equally relevant is, why now," Jalan said.

Rubbishing the government’s argument that secrecy was essential for the success of the move, Jalan said telling people the government was concerned about black money was also about giving them a notice.

"It could be done in a way where people are prepared. Telling people that we are concerned about black money is also about giving them a notice. Supposing, instead of being a secret decision, if it was announced in public. What would have happened?" he said.

"There is no reason to my mind to be secretive, unless there is an emergency. I want to do it in three weeks, or two weeks or one week. As in a surgical strike. But this is not the same thing. On that, there can’t be two views. I am talking as a citizen here," he added.

Of the argument that taking time would have allowed black money hoarders to deposit it somewhere, he said "But this is precisely what they are doing (with the decision being kept a secret) now, maybe not to the same extent…So ‘why now’ is not clear to me."

He said that 90 to 95 percent of people in this country do not have black money so any policy to tackle it must strike a balance. “This is where we need to strike a balance, doing something with a notice and doing it in a way where the majority of the people are not hurt. You see the end is fine, you have to carefully choose the means to achieve this end,” he said.