Former Reserve Bank of India Governor Raghuram Rajan’s first response to demonetisation was: “I am not quite sure if what you meant is demonetise the old notes and introduce new notes instead. In the past demonetisation has been thought off as a way of getting black money out of circulation. Because people then have to come and say ‘how do I have this ten crores in cash sitting in my safe’ and they have to explain where they got the money from. It is often cited as a solution.
Unfortunately, my sense is the clever find ways around it.” Rajan’s response was well thought out. Sources disclosed that Rajan did not agree with the idea of demonetisation even while serving as governor. And it is one of the reasons why Rajan had to go. But this is not news. The news is when did the printing of the new currency start. Twenty-one billion notes needed to be replaced, and the combined capacities of the two major printing press entities (one operated by the RBI, and one under the supervision of the Ministry of Finance) is around three billion notes per month, and that too with an increased number of working shifts. The bottom line-it would have taken six-to-seven months for the printing to be complete; to supply around Rs 9 lakh in new currency notes. Narendra Modi had a roadmap in his mind when he announced the Jan Dhan Yojana and the Voluntary Disclosure of Black Money Scheme. Currency printing could have started the moment the VDBM was announced but the bottleneck was Rajan. In the given scenario, Rajan had to be removed, and on August 20, 2016, Urjit Patel was brought in as the new governor. The printing began immediately with the signatures of Urjit Patel on the order but it was too late and the demand and supply gap was too high. The rest we know.
