Two days after the Centre informed the apex court that it had consulted the Reserve Bank of India (RBI) before going forward with the demonetisation policy in 2016, actor-turned-activist Prakash Raj on Friday (November 18) tried to insinuate that the Modi government had lied to the Supreme Court.
In a tweet, Raj asked, “Dear citizens…Who is telling the Truth?…#justasking” His tweet was accompanied by a picture of Prime Minister Narendra Modi and former RBI Governor Raghuram Rajan.
“We did demonetisation after extensive consultation with the Reserve Bank of India,” the actor attributed the statement to the Union Government. “I was RBI Governor during the time of demonetisation. RBI was not asked to make a single decision on demonetisation,” he attributed another statement to Rajan.
Prakash Raj tried to suggest that there is an ‘inherent contradiction’ between the claims made by the former RBI Governor and the incumbent government at the Centre.
For starters, Raghuram Rajan was not the Governor of the Reserve Bank of India at the time of demonetisation. According to the website of the RBI, Rajan held the position of Governor between September 4, 2013, to September 4, 2016.
On the last day of his tenure, Dr Udit R Patel officially took charge as the RBI’s Governor. As such, it was during the term of Dr Udit Patel that the Modi government rolled out the demonetisation of its ₹500, and ₹1000 currency notes on the night of November 8, 2016.
Modi government’s response to SC over demonetisation
In its affidavit to the Supreme Court on Wednesday (November 16), the Union Ministry of Finance said that demonetisation was implemented in consultation with the Reserve Bank of India, starting in February 2016.
It further emphasised that the policy to demonetise ₹500 and ₹1000 rupee notes was a “well-considered decision… (taken after) extensive consultation with the Reserve Bank and advance preparation.”
After listing the benefits of the exercise, the Ministry of Finance pointed out that the consultation with the RBI and the subsequent decision-making process was kept confidential by the government.
Remarks of Raghuram Rajan about the government keeping the RBI in loop
As stated earlier, Raghuram Rajan was not the Governor of the Reserve Bank of India at the time of demonetisation. His term had ended 2 months prior to the historic event i.e. on September 4, 2016.
It is thus clear that RBI, under him, was not asked to ‘make a decision’ about the policy (given its implementation in November of that year). The confusion seems to stem from a remark that Rajan made in his 2017 book ‘I do what I do.’
“At no point during my term was the RBI asked to make a decision on demonetisation,” he had written. However, this line, in particular, is just a small excerpt from his ‘disclosure’ about the demonetisation plans.
In September 2017, Raghuram Rajan was quoted as saying, “I was asked by the government in February 2016 for my view on demonetisation, which I gave orally.
“I was asked by the government in February 2016 for my view on demonetisation, which I gave orally. Although there might be long-term benefits, I felt the likely short-term economic costs would outweigh them,” the book excerpt read.
“Although there might be long-term benefits, I felt the likely short-term economic costs would outweigh them…I made these views known in no uncertain terms,” he had written back then.
It is thus evident that the affidavit submitted by the Union Government in the apex court is in line with the book excerpt of Rajan, dating back to 2017. The Centre had indeed begun consultations with the RBI in February 2016.
During his tenure, the RBI was not tasked to take a decision, given that the nationwide exercise was rolled out two months after he demitted office.
In April 2018, Raghuram Rajan dismissed the allegation that the RBI was not consulted by the Modi government prior to the demonetisation. He made the remarks at the Harvard Kennedy School in Cambridge.
“I didn’t ever say that I wasn’t consulted (on demonetisation). In fact, I have made it quite clear that we were consulted and we didn’t think it was a good idea,” he was quoted as saying by PTI.
Prakash Raj defends himself with a cryptic tweet
It must be mentioned that RBI is owned by the Government of India and reservations expressed by the Governor are not binding on the Centre’s policymaking.
Thus, it becomes evident that Prakash Raj quoted Raghuram Rajan out of context to suggest that the Modi government unilaterally decided on the demonetisation policy and mislead the apex court.
After being called out on social media for peddling disinformation, Prakash Raj suggested that both the Modi government and the former RBI governor had been lying about demonetisation.
In a tweet, he claimed, “The answer is both are LIES.” In reality, it is the Singham actor who had been quoting the Centre and Rajan out of context to further his agenda. As he stood exposed for purveying malicious fake news, Raj tried to salvage himself by claiming that both the pieces of information in his earlier tweet were lies, which was another lie to cover up his fiasco and promote the misleading claim that the Centre had no consulted with the RBI before going ahead with demonetisation.
