Demonetisation had displaced the livelihoods of many innocent people, who had to go through some of the worst times in getting their own money exchanged. The after-effects still continue in the form of massive drop in employment even after two years.
While the government officials and RBI have given endless reasons to announce an unplanned demonetisation suddenly, the people of India were eagerly awaiting the CAG report on the same to access the real motive behind the said decision of the government. It is more than 20 months since the previous CAG made the statement that they are preparing a report but there is no sight of the promised audit report on demonetization as yet. However, the Comptroller and Auditor General (CAG) officials have shockingly announced on Thursday that CAG does not audit RBI nor public sector banks.
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As reported by the Free Press Journal the officials clearly seemed to have disassociated themselves from auditing Demo, stating that the decision to withdraw the currency notes was done by the RBI and CAG has never audited the Central Bank. This clarification is in response to the open letter signed and submitted by 60 bureaucrats and diplomats to President Ram Nath Kovind; demanding the submission of audit reports on the Rafale Fighter Aircraft Deal signed between India and France in 2015 and Demonetization in November 2016. They also questioned an unwarranted delay in preparing reports on Demo and the Rafale Deal. They have also alleged that the reports were being deliberately delayed to save the Central BJP Government from any embarrassment before the 2019 General Elections.
The letter was signed by former IPS officer and former Ambassador to Romania Julio F Ribeiro, former IFS officer and Ambassador to Myanmar PMS Malik, former IAS officer turned social activist Aruna Roy, former Pune Police commissioner Meeran Borwankar, former CEO of Prasar Bharati Jawhar Sircar, former envoy to Italy K P Fabian amongst other Central and all India services officers. They also pointed out an interview by former CAG, Shashi Kant Sharma, that CAG was well within their right to demand an audit from the RBI if the decision impacted tax revenues. In an interview to The Hindu in March 2017, Sharma had quoted his views on the Audit for Demonetisation as below,
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“Demonetisation per se is a banking and money supply issue and as such, outside CAG’s audit jurisdiction. But CAG is well within its rights to seek audit of the fiscal impact of demonetisation, largely its impact on tax revenues. That way the issue gets linked with the public exchequer. There are also other linkages with the public exchequer, such as expenditure on printing of currency notes and RBI dividend to the Consolidated Fund. The Income Tax Department is reportedly planning to engage specialised private sector firms to carry out analysis of the huge data it has received from the banks.
This banking transaction data and the follow-up by the Revenue Department can also be subjected to CAG audit. The audit can look into various risks, such as errors and omissions in identifying the potential tax evaders, failures to pursue the identified suspects, selective and arbitrary pursuance of leads and consequences thereof, etc. Many of these issues will be covered in our audits which we propose to take up in the coming days.”
The letter signed by the 60 dignitaries states that during the previous UPA government, CAG had audited several reports in a timely manner and never had a perception of government influence or interference in discharging their duties. Infact CAG had only invited appreciation from various quarters for submitting their unbiased reports during the previous regime. They further criticised the current CAG that a strong impression was gaining ground that CAG is delaying the audit on Demo and Rafale Deal and may not submit reports anytime before May 2019.
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The larger questions that remain and need to be raised are :
- Was Demonetisation conceived and announced by the RBI or Was it a decision taken by Prime Minister Narendra Modi and his team?
- It must not be forgotten that the various credits and appreciations in first few months of Demo were only and only accredited to the Prime Minister and there was no mention of RBI and their inputs for the same, except for being a mere executing channel
- In March 2017, former CAG head did promise a report even if Demo was planned and executed by RBI, however, the same has now been ruled out by the current CAG officials that they cannot audit the same
- Former RBI Governor Raghuram Rajan had announced discontinuation of his second term and the newly appointed current Governor only took charge in August 2016. Could the new governor-in-charge Urijit Patel have taken any such decision of this magnitude within less than 3 months of him becoming the Governor
- Is that also the reason for so much unrest within the Central Bank of India officials, as they feel the Demo muck and buck has been completely passed onto them?