On 30 August, the Reserve Bank of India (RBI) launched its annual report for the financial year 2016-17. Nearly eight months after the prime minister announced the demonetisation of higher-denomination notes, the Reserve Bank in its report noted that nearly 99 percent of the currency that was taken out of circulation had been returned. The report further noted that the RBI’s income for its financial year ending 30 June fell by 23.56 percent, to Rs 61,818 crore. The central bank noted that it spent Rs 7,965 crore on printing currency notes in 2016-17, more than doubling the previous year’s figure of Rs 3,420 crore. The report also pointed out that 29 billion pieces of currency were issued in an attempt to rapidly remonetise, significantly exceeding the 21.2 billion pieces of currency issued the previous year. The RBI faced severe criticism after the report’s release—several analysts suggested that the data showed that demonetisation had largely failed to deliver on the policy objectives that the government had detailed.
Shortly after the policy was announced in November 2016, D Thomas Franco, the current general secretary of the All India Bank Officers’ Confederation—a trade union representing over 2.5 lakh senior officers from rural banks in India—had demanded the resignation of the RBI governor Urjit Patel. Franco said that the demonetisation would have lasting effects on the economy, and that by approving the policy, the RBI had committed a grave error. He added that the governor should take moral responsibility for the death of 11 bank officers in the 12 days following the announcement of the scheme. On 1 September 2017, Kedar Nagarajan, a web reporter at The Caravan, spoke to D Thomas Franco to discuss Franco’s views on the report and the impact of demonetisation so far.
Kedar Nagarajan: What are your thoughts on the data contained in the RBI’s latest report?