Patel met the panel on finance to answer questions about the
Nov. 8 abolition of 500- and 1,000-rupees notes, or 86 percent
of the currency then in circulation, in a bid to unearth
billions of dollars of unaccounted money.
About 15.4 trillion rupees worth of the notes were removed from
Patel, however, failed to provide any figure for how many of the
banned notes had been deposited into the banking system and he
did not provide clarity on when the cash situation would become
normal, according to a second member of the panel who was also
present at the appearance.
Both the members spoke on the condition of anonymity as the
panel's deliberations are confidential.
The RBI governor also told the parliamentary panel that
consultations between the government and the central bank on
demonetization had began in January 2016, the second panel
member told Reuters.
However, the government notified the RBI it wanted specifically
to scrap 500- and 1,000-rupee notes on Nov. 7, a day before the
RBI board formally approved the recommendation, the member said,
citing a note sent to the panel by the central bank. Modi then
announced the decision later on Nov. 8.
The ban sparked a severe cash crunch that has disrupted economic
activity, leading to the biggest monthly fall in automobile
sales in 16 years in December. The slump coincided with a
contraction in services industry and manufacturing activity.
The International Monetary Fund (IMF) on Monday cut a full
percentage point off India's GDP growth forecast, to 6.6
percent, in the fiscal year that ends in March 2017, citing the
blow to the cash-reliant economy.
The IMF also trimmed the growth outlook for the fiscal year
2017/18 to 7.2 percent from 7.6 percent estimated earlier.
On Wednesday, two top finance ministry officials also appeared
before the panel to present the government's position.
The member said the panel would summon Patel again after the
upcoming parliament session.
(Writing by Rajesh Kumar Singh; Editing by Rafael Nam)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.