Hyderabad: According to the RBI, the currency in circulation increased to Rs 19.6 lakh crore in October 2018 from Rs 17.9 lakh crore on November 4, 2016.
Chief Economist of India Ratings & Research, Dr Devendra Kumar Pant, told this newspaper, “The RBI reported that 99.3 per cent of the banned money has been returned to the bank and now we see black money seized in different corners of the country. This indicates that there are loopholes still existing in the system. The generation of black money in the Indian economy has not died despite alteration and relaxation in the system.”
Satish Sha, professor of economics, said the exercise aimed at extinguishing black money received in the form of cash, has failed. Demonetisation was claimed to be the solution to the country's black money and counterfeit currency problems. Later it was labelled as a move to encourage digital payments. Now that the RBI report is out, and cash as a payment instrument is still dominating the payment space, it is unclear if demonetisation made the promised progress, he said.
In the past 24 months, cash withdrawals from ATMs have increased by eight per cent. Online transactions too have increased. Mobile banking transactions rose to Rs 2.06 lakh crore in August 2018 from Rs 1.13 lakh crore in October 2016.
Despite this, there are still questions about whether the hardship to the public and damage to the small-scale cash-run businesses was worth anything.
BJP spokesperson Krishna Sagar Rao said the banning of high-value notes was the beginning of reform.
“Here are two issues to look into. The intent of the government was to reform governance. Eradicating black money is one of the facets of the demonetisation sphere, and to an extent it infused fear in the black market circuit, which is a good outcome. It has also resulted in the increased tax net. The grey market still operates but the government has made a beginning,” Mr Rao said...