Over 99 per cent of demonetised notes back with RBI

30 August, 2018, 17:27 | Author: Kevin Carter
  • Demonetisation Flawed in planning not in principle

Niti Aayog member and senior economist Bibek Debroy indicated that approximately Rs 1.6 lakh crore - 10% of the demonetised currency - would be extinguished and not come back into the system.

The RBI has also revealed that post demonetisation, RBI has spent Rs 7,965 crore in 2017-18 on printing new Rs. 500 and Rs. 2,000 and other denomination notes. The RBI says the indent for 2017-18 was higher by 9.1 per cent as compared to past year.

While many hailed demonetisation as a step that would curb black money, corruption and check counterfeit currency but RBI said, "Counterfeit notes detected in specified bank notes decreased by 59.7 and 59.6 per cent in the denominations of Rs. 500 and Rs. 1,000, respectively". The SBNs received were verified, counted and processed in the sophisticated high speed CVPS (currency verification and processing system) for accuracy and genuineness, and shredded and briquetted in the shredding and briquetting system, it said.

Of the Rs 15.41 lakh crore worth 500 and 1,000 rupee notes in circulation before November 8, 2016, notes worth Rs 15.31 lakh crore have been returned. "After demonetization if it had grown at that rate, the currency, which is in the system today, is 87-88 per cent of that.so the Rs 3 lakh to Rs 4 lakh crore less currency is in the system today than it would have been had the old system been in place", he said in an apparent reference to the Rs. three lakh to Rs. four lakh that was claimed would be extinct.

"I suspect that the bulk of the Rs 13,000 crore is in Nepal and Bhutan and some that was lost or destroyed". Over 100 lives were lost. Thousands of SME units were shut down. "Lakhs of jobs were destroyed", Chidambaram tweeted. "That alone was a loss of Rs 2.25 lakh crore a year".

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"The figures show the demonetisation exercise was flop", said a chief economist at a bank, who sought anonymity as the subject is a sensitive one.

Rahul Gandhi accused Prime Minister Narendra Modi's demonetisation move failing to eradicate black money.

The annual report, curiously, also provides a glimpse of how attempts at remonetisation over the a year ago focused heavily on supplying the new Rs 500 and Rs 200 currency notes. Experts say, that having a large number of Rs 2000 notes in circulation would have defeated the goal of demonetisation, which was to stop circulation of black money.

"Whether demonetisation has failed or not depends on its objective". Over five lakh shell companies were closed down, he said.

On account of demonetisation, 2016-17 was an exceptional year and the after-effects continued in 2017-18 as well, said the RBI report, adding that the overall indent for 2017-18 was higher by 9.1 per cent as compared to last year. The number of counterfeit notes of the redesigned Rs 500 and the new Rs 2,000 increased almost 50 times and 28 times, respectively, in the last fiscal compared to the previous financial year.

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