Mumbai/Delhi: The demonetisation of high denomination currency notes announced in November 2016 appears to have failed to achieve its desired results as the provisional data released by the Reserve Bank of India (RBI) on Wednesday showed that around 98.96 per cent of the banned notes came back to the banking system.
In its annual report for 2016-17, the central bank disclosed that Rs 15.28 lakh crores out of Rs 15.44 lakh crores of banned currency notes were deposited as on June 30, 2017. However, the RBI pointed out that these figures are provisional and could change after the verification of numerical accuracy and authenticity of the deposited notes.
Provisionally, all that the government had gained due to demonetisation turned out to be Rs 16,050 crore, which have not returned to the banking system. Out of this, Rs 8,900 crores was said to be in the denomination of Rs 1,000.
It said the total expenditure incurred on security printing stood at Rs 7,965 crore for the period July 2016-June 2017 as against Rs 3,420 crore incurred in 2015-16 — an increased cost of Rs 4,545 crore on account of remonetisation or issuance of new notes.
After deducting the expe-nditure for printing new notes, the net gain from the mammoth demonetisation exercise boils down to Rs 11,505 crore.
Following the report, the Opposition quickly poun-ced on the data to attack the government, with former finance minister P. Chidambaram wondering if demonetisation was “a scheme designed to convert black money into white”. “RBI ‘gained’ Rs 16,000 crore, but ‘lost’ Rs 21,000 crore in printing new notes! The economists deserve Nobel Prize,” he tweeted.
P Chidambaram hits out at RBI; SP leader to move motion against RBI governor
Criticising the Reserve Bank of India, on whose recommendation the government said the demonetisation was ordered, former finance minister P. Chidambaram tweeted: “Rs 16,000 cr out of demonetised notes of Rs 15,44,000 cr did not come back to RBI. That is 1%. Shame on RBI which ‘recommended’ demonetisation.”
Samajwadi Party leader Naresh Agarwal said his party would move a privilege motion against RBI governor Urjit Patel for “misleading a parliamentary panel by not revealing the number of notes returned”.
In a statement, the finance ministry said on Wednesday that the effective currency in circulation today is only 83 per cent with full remonetisation having taken place. It said that with over Rs 15 lakh crore of junked currency coming back into the banking system post demonetisation, a “significant portion” of it could be black money.
“A significant portion of SBNs (Specified Bank Notes) deposited could possibly be representing unexplained/black money,” the finance ministry said. The tax authorities have found undisclosed income of Rs 17,526 crore and Rs 1,003 crore has been seized so far, the finance ministry said in a statement.
Interestingly, the RBI report also highlighted the significant growth in the number of counterfeit currency notes detected by various banks.
During FY17, 7,62,072 pieces of counterfeit notes were detected in the banking system, of which 95.7 per cent were detected by commercial banks. Detection of counterfeit notes was 20.4 per cent higher than the previous year.
Former RBI deputy governor R. Gandhi is of the view that demonetisation will have a long-term impact, saying expectations of various quarters that sizeable portion of the demonetised currency will not return have not been fulfilled.
While stating that Rs 15.28 lakh crore have already come back, the RBI said the government has allo-wed District Central Coo-perative Banks (DCCBs) to deposit the scrapped notes accepted by them from their customers during November 10-14.
Also, the RBI is in discussions with the government on acceptance or otherwise of those notes held by citizens and financial institutions in Nepal. The report further said that during 2016-17, the number of suspicious transaction reports filed by banks and other financial intermediaries ”witnessed a quantum jump”.
