With the note ban is reaching 45th day, the Standing Committee on Finance met on Thursday under the chairmanship of Congress leader M Veerappa Moily and various issues and its impact were briefed by various experts on demonetisation. Most of the economists were divided on the Government’s decision of cash recall and expressed deep concern towards the demonetisation being pursued by the Bhartiya Janata Party as well.
However, sources said Reserve Bank of India (RBI) Governor Urjit Patel will brief a parliamentary panel on January 19 on issues concerning demonetisation and its implications on the economy.
Patel, who was supposed to brief the finance panel, was reportedly absent due to some official reasons. But some independent experts who offered their view before the panel were noted economists Rajiv Kumar and Mahesh Vyas, former chief statistician Pronab Sen and Kavita Rao of National Institute of Public Finance and Policy (NIPFP). The meeting was also attended by former Prime Minister Manmohan Singh.
However, sources said Patel will brief a parliamentary panel on January 19 on issues concerning demonetisation and its implications on the economy. During the discussion, the panel also sought to know from the experts their opinion on the existing cash to GDP and tax to GDP ratios. “The committee has called Patel on January 19 to brief the members about the contours of demonetisation and also the efforts being made by the central bank to ease cash crunch in the economy. The panel will also lend an ear to bankers and Indian Banks’ Association,” the sources said.
Sources further added that the experts also sought how the conversion of cash economy into digital would take place within the confined time declared by the central Government. All three economists who expressed concern on demonetization spoke on the issue of counterfeit currency, inflation and black money.
Before taking on record the view of RBI Governor, the 31-member panel will question Finance Ministry officials and also IT experts on demonetisation and steps taken to promote digital economy.
Explaining the crux of the issue of note ban, it was, however, pointed out that the digital economy at present is 3 per cent and efforts are on to take it to 90 per cent. Besides, other experts are likely to give their opinion on demonetisation, which came into effect from November 9.
One economist also argued the implications of note ban which might hamper the short term growth of the country’s economy. “This committee will submit its report on demonetisation on the first day of the Budget Session of the Parliament,” said one of the Panel members who requested not to be named. Besides, it was also argued that for a meaningful war against black money, the denotification of a part of the currency every two years.
lastly, the sources said that there would be another meeting with the experts on December 27, a day before Prime Minister’s 50-day deadline ends. “Even the Prime Minister Narendra Modi is expected to meet the economists on December 27 to discuss the state of the economy. The economists in the first half of the day will meet the Finance Minister Arun Jaitley and spend the second half with the Prime Minister,” the sources added.