This information has been received by RTI activist Venkatesh Nayak under Right to Information Act. He has put this information on the website of the Commonwealth Human Rights Initiative (CHRI).
Demonetisation was announced at 8 p.m. on 8th November 2016. As per the report few hours before the announcement the 561th meeting of the Board of Directors of the RBI in Delhi was held at 5.30 pm. In this meeting, the RBI had expressed disagreement with the government's logic about the decision to ban Rs 500 and Rs 1000 notes.
The board of directors of the RBI believed that most of the black money was not in cash but in real estate and gold assets. In such cases, the ban on bondage will not affect these properties.
The government had argued that the circulation of notes of 500 and 1,000 rupees has increased by 76.38 per cent and 108.98 per cent, respectively. Government also said that black money transactions are in cash. Read More : Trump proposes $4.7 tn budget for fiscal 2020
The government also mentioned that the fake notes have also increased to close to Rs 400 crore. However, the RBI did not agree with the logic of the government. At the same time, the board of directors had notified the ban on bondage, but it also had a negative impact on the GDP in the short run.
The Following significant observations were made by the Directors.
It is a commendable measure but will have short term negative effect on the GDP for the current year.
The growth rate of economy mentioned is the real rate while the growth in currency in circulation is normal. Adjusted for inflation, the difference may not be so stark. Hence, this argument does not adequately support the recommendation.
While any incidence of counterfeiting is a concern, Rs 400 crore as a percentage of the total quantom of currency in circulation in the country is not very significant.
Most of the black money is held not in the form of cash but in the form of real sector assets such as gold or real estate and that this move would not have a material impact on those assets.
Arriving domestic long distance travelers who may be only carrying high denomination notes will be taken by surprise at railway stations/airports for payments to taxi drivers and porter charges and hence put to hardship. It would also have adverse effect on tourists.
Exemption provided to medical stores can be extended to private medical stores as well.