In my last blog of 2016, I had asked the question whether there could be a middle path between the imperative of maintaining absolute confidentiality and collective decision making. I had used the current hot-potato of demonetisation as the case study for the purpose. As matters have progressed, clearly, it is seen that apart from a closed inner political circle – not everybody in the Union government cabinet seems to have been taken into confidence – participation in the decision making process has been confined to the Secretaries of the Finance Ministry and the Governor of the Reserve Bank.

Considering the sensitivity of the decision to declare currency notes of the total value of 86 per cent of the cash in circulation as invalid, there can be no questioning of the need to confine participation in policy making to a select few. However, it is when things go wrong – and indeed they have gone seriously wrong – that the need to fix accountability emerges.

Whilst in theory it is easy to say that accountability for miscalculations of the enormity of the problem and the mismanagement of downstream actions ought to be fixed on those concerned, in reality, as events show, this is nearly impossible to be done.

In the eye of the storm is the Reserve Bank of India (RBI), an independent, autonomous institution with strong statutory regulatory powers. If there is any one institution that has had its credibility seriously eroded due to the demonetisation exercise, it is the RBI. Both on giving the nod for the demonetisation exercise as also in managing the downstream exercise of remonetisation, the RBI seems to have committed serious errors of judgment and decision making.

On the merits of the demonetisation exercise per se, given that one of the main original objectives was to catch those stashing away black money unawares, the RBI seems to have ignored its own estimation of the size of the black money economy in the country. Given that nearly all the demonetised bank notes have been deposited back in the banks during the grace period provided, it seems that the objective of rendering valueless stashes of black money, has not been fulfilled. Then comes the later idea of promoting a cashless economy. It is not known whether the RBI endorsed this idea in the first place, or is now compelled to defend it because of the failure of the first objective.

On the management of the remonetisation exercise, the blame cannot be shared – the RBI has to take nearly all of it. Yet, in defence of the RBI, it would not have been possible for it to beef up its note manufacturing capability in advance of the demonetisation exercise. If it had taken advance action for printing new notes, the secret of demonetisation would have been inevitably leaked; and that would have been another kind of disaster. Having said that, subsequent delays in printing and distribution of new notes and glitches with ATM machines, led to the RBI taking decisions on a daily basis on the amounts of money that could be withdrawn, or deposited. The panicky reaction of the RBI did nothing to enhance its reputation.

What has driven the final nail in the coffin of the RBI’s credibility has been its obdurate silence. It might have hoped that the silence would be interpreted as that which a higher authority has the latitude to maintain, but on the other hand, that has only further lowered the perception of the RBI in the eyes of citizens.

Yet, the question is, can the RBI be nailed for this?

From what one can see, the answer is a bland ‘no’.

Let us consider the exchanges between honourable members of the Parliamentary Committee set up to seek information on the demonetisation exercise and the RBI a few days back and you will see what I mean.

In came our honourable MPs, bowling with guile and venom. Does the RBI know how much value of old notes have been deposited in the banks? They asked.

No, said the Governor of the RBI. The notes are still being counted. In other words, he ducked under the bouncer.

Wait a minute.

As far as I know, nearly every bank branch in India is computerised. Besides, even if they are not, every bank branch has to close its accounts every day. The deposits, cash balances, bank entries in the day book and the accounts registers, have to be tallied and noted. No teller or cash disbursing or cash receiving official can go home on any day, without actually counting the day’s receipts and withdrawals. That has been the way banks have been run for decades.

Considering the levels of computerisation and networking in banks, it would be the height of incompetence if banks were not able to mention to the last detail on a daily basis, the amounts of money that have been deposited in the form of old notes. Clearly, the RBI governor should have these details on his fingertips? Surely, he should be able to give a figure correct as to the previous evening – or even if some latitude is to be given – a few evenings before the appearance before the Honourable Committee?

Yet, when more probing questions were asked, a member of the Parliamentary Committee, no less than a former Prime Minister, rose to the defence of the RBI governor, informing him that it was not necessary that he responds. Answering these questions asked would undermine the image of the RBI, he said.

I would have imagined exactly the opposite.

Clearly, fixing accountability for the bad management of demonetisation is going to be a slippery thing.