RBI Confirms 99.15% of Demonetized Money Coming Back

Demonetisation Flawed in planning not in principle

Demonetisation Flawed in planning not in principle

Quoting RBI report, the Trinamool Congress supremo said 99.3 per cent of the demonetised money has come back to the banking system. "The value share of high denomination currency (Rs 500 and Rs 2,000 notes) in overall currency composition in March 2018 was 80.6 per cent, which is lower than it was in the pre-demonetisation period (86.4 per cent)". The crisis of fake Rs 2,000 notes is more alarming as their supply was cut by 23 times in 2017-18 vis-a-vis 2016-17.

According to the report, out of the Rs.15.41 lakh crore of Rs. 500 and Rs. 1,000 notes in circulation post demonetisation, nearly Rs.15.31 lakh crore notes worth have been returned.

While the actual estimate of fake Indian notes in circulation (FICN) has been hotly debated, the central bank's annual report implies that demonetisation may not have done much to curb the generation of new fake currency.

Now, that the statistics have been revealed the entire argument of Modi government that the exercise curbed black money that has been in circulation falls flat.

The RBI, in its previous annual report released, in August 2017 had stated that Rs 15.28 lakh crore, or 99 per cent of the demonetised currencies totally worth Rs 15.44 lakh crore, had returned to the banks by 30 June 2017.

"I suspect that the bulk of the Rs 13,000 crore is in Nepal and Bhutan and some that was lost or destroyed".

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Stating that the country paid a huge price for demonetisation, he said: "Over 100 lives were lost, 15 crore daily wage earners lost their livelihood for several weeks".

"That alone was a loss of Rs 2.25 lakh crore a year", he said. At a press conference on Wednesday evening, senior finance ministry official Subhash Chandra Garg refused to elaborate on how demonetisation helped crack down on black money.

Garg said there were benefits in the process with major advantage being induction of newer notes with more security features, "virtually weeding out all the fake currency".

Chidambaram said every rupee of the Rs 15.42 lakh crore, barring a small sum of Rs 13,000 crore, has come back to the RBI. The value of total banknotes in circulation increased by 37.7 per cent over the year to Rs 18-lakh crore in March 2018.

While The Wire has over the last eighteen months reported and analysed how India's currency-in-circulation (CiC) and currency-to-GDP ratio has not changed drastically after demonetisation, the RBI's annual report provides further proof of how little things have changed. Indian economy lost 1.5 per cent of GDP in terms of growth.

In new series of banknotes in the denominations of Rs 500 and Rs 2000, counterfeit notes detected during 2017-18 were 9,892 and 17,929 against 199 and 638, respectively, during the previous year.

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