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RBI Tried To Bury Details Of Demonetisation Advice That Modi Ignored

Activist who filed an RTI application seeking minutes of the RBI's board meeting which approved demonetisation describes his over two-year-long struggle to get the documents.
RBI stalled Nayak's RTI request for over two years. 
RBI stalled Nayak's RTI request for over two years. 

NEW DELHI―The media has gone to town again on the issue of notebandi. The demonetisation of Rs. 500 and Rs.1,000 currency notes began on 08 November, 2016. People, families and large segments of the economy are still reeling under its impact.

Two days ago, I placed the contents of the meeting minutes of the Reserve Bank of India (RBI) in the public domain. India’s principal Opposition Party―the Indian National Congress (INC)—held a presser and promised to investigate abnormal flows of funds from foreign tax havens during the demonetisation period. Readers might ask―why now, when the job is done and dusted? Should we not let sleeping dogs lie? It can only be answered with another question― should not the truth be told, even if it takes more than two and a half years.

Yes, that is how long it took to pry open copies of official records from RBI’s clenched fist. Six days after Hon’ble Prime Minister Mr. Narendra Modi announced the Government’s decision to end the legal tender nature of the high value currency notes which accounted for 86% of the total cash in circulation, I filed a request for detailed information under the Right to Information
Act (RTI Act).

Readers may once again ask―“Why?” I can remember at least two reasons- the first, I wanted to test the potency of the RTI Act―can it serve as a tool to expand the boundaries of transparency beyond what the Government was willing to tell people why it was making most of the cash they held, illegal?

The second reason was an emotional one―as my brother and I queued up for hours before our bank to change the useless notes for the newly printed ones, we watched old people faint or fall ill standing in long queues in the freezing cold. Surely, people of modest means should not have had to go through such torture to save their hard-earned money from becoming worthless just because the Government launched a “surgical strike” on black money. It is
reported that more than a hundred people died waiting in serpentine queues in this manner and by the Government’s own admission, at least three bankers died of fatigue counting old and new cash. The price paid was too high, compared to the expected benefits of demonetisation that the Government listed in its 2016 November gazette notification.

“In my RTI application, I asked for copies of the minutes of the Board meeting at which RBI’s Governors discussed the proposal and the recommendation that they forwarded to the Government after the meeting approving the demonetisation initiative”

So in my RTI application, I asked for copies of the minutes of the Board meeting at which RBI’s Governors discussed the proposal and the recommendation that they forwarded to the Government after the meeting approving the demonetisation initiative. I also asked for other information which I shall describe shortly.

In less than a week, RBI’s Central Public Information Officer (CPIO) rejected my request. Despite how busy RBI officials were rolling out the demonetisation exercise, he was unexpectedly prompt. He claimed that I was asking for information about “sensitive matters”. So it could not be disclosed as per Section 8(1)(a) of the RTI Act.

I was not willing to stomach the CPIO’s reply quietly. What was “sensitive”- what the Government was doing or what crores of Indian citizens were going through day after day, week after week for several months? So, first I released the RBI’s response to my RTI publicly and the media’s reportage was amazingly widespread.

Surprisingly, not many people shared my views about demonetisation, then. While a few pundits questioned its rationale, there was near total support for the Prime Minister’s move across the urban and rural divide. Millions accepted the narrative of expected benefits that were spun around the exercise. Finally something was being done to fix the filthy rich, they thought. This was in addition to the fond hope that the Government would make good on its
Robin Hood-like election promise of robbing the rich to feed the poor. Millions of no-frills bank accounts opened under the newly launched financial inclusion programme- PM Jandhan Yojana (PMJAY) were waiting for at least some part of the promised Rs. 15 lakh cash deposit. It was only much later that the balloon was punctured by political leaders who said, they did not actually mean they would indulge in such philanthropy. Another RTI intervention by a prominent media house also revealed that many “poor” bankers were depositing the princely sum of ₹1/- in every such account to prevent them from becoming dormant.

On the eve of 2017, almost two months after the launch of demonetisation, the Hon’ble Prime Minister noted with satisfaction the widespread public support for the exercise and called upon sociologists and academics to study its impact. The next day, the Union Finance Minister declared , the Government would implement every word of the PM’s speech. This was my cue. I challenged the CPIO’s refusal by citing these speeches. How can the effects of demonetisation
be debated or studied when the basic information I sought are not made public, I asked. The First Appellate Authority advised the CPIO to give more detailed reasoning. According to the law, she was required to examine the correctness of the CPIO’s decision, which she did not. The CPIO reiterated his earlier reply and explained that the documents I sought, contained a range of sensitive information that connected with economic and financial security of the country. So they could not be disclosed.

Not one to give up, in April, 2017, I challenged the RBI’s position before the Central Information Commission (CIC) and waited for my chance to argue my case for greater transparency. The first hearing was scheduled in August 2018- more than 16 months later. As the CIC has between 24,000-25,000 cases pending at any given point of time in recent years, this is how long to takes
for cases to even come up for hearing. Strangely, the first hearing was not held on the appointed date. It was postponed. A fresh date was fixed in October. That hearing too was cancelled without reasons being given. The next hearing was to be in December, 2018. When I landed up at the CIC, I was told that this hearing would also not take place because RBI’s representatives could not participate from the NIC studio in Mumbai which was temporarily out
of service. A fourth date was fixed in January 2019. That hearing was also cancelled for reasons best known to the CIC.

The first effective hearing took place on the fifth date, in February, 2019 before a newly appointed Information Commissioner. Irked by the undue delay in furnishing such basic information, the CIC warned RBI’s representatives who attended the hearing against adopting a casual approach to such an important matter. Strangely, the CPIO had absented himself from the hearing. The CIC issued a penalty show cause notice to the CPIO. Believe it or not, RBI’s
representatives offered to make the Board minutes public!

“Irked by the undue delay in furnishing such basic information, the CIC warned RBI’s representatives who attended the hearing against adopting a casual approach to such an important matter. Strangely, the CPIO had absented himself from the hearing. The CIC issued a penalty show cause notice to the CPIO. Believe it or not, RBI’s representatives offered to make the Board minutes public!”

The sixth date of hearing was scheduled for 8 March, 2019 which was also cancelled, for reasons best known to the CIC. Nevertheless, that day, RBI’s CPIO sent me the minutes of the 561st meeting of the Board of Governors and the Resolution they signed in December 2016, approving the demonetisation exercise. I posted both documents online . The contents have rekindled the debate on the necessity of demonetisation. A lot has been said and there will be
more debate on this issue. I have already commented on the deliberations of RBI officials contained in these documents. Suffice it to say, that RBI rejected every rationale that the Government offered for the demonetisation exercise but gave its stamp of approval in the fond hope that it would lead to greater financial inclusion of the poor and incentivise people to use
electronic modes of payment instead of cash. Both goals have not been reached yet to the extent expected.

I am waiting for the next date of hearing at the CIC. In my RTI application, I had also asked for documents and reports that RBI was given in support of demonetisation by any individual or entity including the Government and file notings involved in the decision-making process. Given the historic nature of the demonetisation exercise, RBI should have voluntarily placed all this information in the public domain under Section 4 of the RTI Act. They have not done so yet and my struggle for transparency continues.

(Venkatesh Nayak is Programme Head, Access to Information at Commonwealth Human Rights Initiative, New Delhi. Views are personal.)

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