By Prarthana Mitra
The Reserve Bank of India said that over 99% of the notes banned by demonetisation have returned to the banking system. The highlight mentioned in RBI’s annual report released on Tuesday dealt the dealing the final blow to Prime Minister Narendra Modi’s pet project that claimed to curb black money.
Here’s what the report says
In November 2016, the government took the nation by surprise when it announced a ban on rupee 500 and 1000 notes, under the pretext to check the flow of counterfeit money and corruption.
Of the Rs. 15.41 lakh crores taken out of circulation due to demonetisation, notes worth Rs. 15.31 lakh crore have been returned. The remaining amount of Rs. 10,720 crore of the junked currency did not re-enter the banking system. The calculation, processing and shredding of SBNs (Specified Bank Notes) were meticulously undertaken by the RBI.
Since the crackdown on high-value currency, the value of banknotes in circulation increased by 37.7% over the year to Rs 18.03 lakh crore at end-March 2018. The volume of banknotes, however, increased by 2.1%, notes Business Today. Furthermore, the RBI reportedly spent Rs. 7,965 crore on printing new Rs. 500 and Rs. 2,000 notes, more than double the spending on cash in the previous year.
Reaction from the opposition
The opposition seized the chance to criticise the centre for its ill-conceived economic policy that cost the central bank crores on printing new money. Delhi Chief Minister Arvind Kejriwal demanded white papers on the demonestisation drive which affected millions around the country, saying people have a right to know what it has achieved. Several Congress leaders demanded an immediate apology from the PM for lying to the nation.
Last year, the Prime Minister said he expected more than Rs. 3 lakh crore of unaccounted money to come back to the system. “Modiji, will you apologise for that lie now? (The) RBI report again proves that demonetisation was ‘Modi-made disaster’ of epic proportions,” said Congress’s Randeep Surjewala.
Calling it foolish, former Finance Minister P Chidambaram on Wednesday said that not a single economist in the world praised demonetisation. In a series of tweets, Chidambaram also said the country paid a “huge price” for demonetising what has turned out to be “a small sum”. For Rs. 10,720 crore, the country lost Rs. 2.25 lakh crore worth of GDP, crores of jobs and over a hundred lives, he added.
The country is still reeling from the aftermath of demonetisation which has drawn sharp criticism even from the Parliamentary standing committee on finance. The programme led to the lowering of the Gross Domestic Product (GDP) by at least 1% point since its adoption. It has also crippled small and medium business enterprises, which form the basis of Indian economy.
Prarthana Mitra is a staff writer at Qrius