99.3% of demonetised currency returned to banks: RBI

Marcus Newton
August 31, 2018

Now, newly released data from the Reserve Bank of India (RBI) shows that 99.3 per cent of high-value notes in circulation - worth around US$216 billion (S$295 billion) - came back to the banks.

The Congress on Wednesday demanded an apology from Prime Minister Narendra Modi, alleging he lied to the country over the demonetisation issue, after the RBI said nearly all the 500 and 1,000 currency notes scrapped in November 2016 returned to the banking system.

He referred to the annual report of the RBI a year ago which said at that time that most of the notes were counted but the process was not complete.

About Rs 15.21 lakh crore of the demonetised Rs 15.41 lakh crore in circulation have been returned to banks, says RBI.

"The total SBNs returned from circulation is Rs 15,310.73 billion", the RBI said in its report.

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.

When Indian Prime Minister Narendra Modi announced the replacement of 80 per cent of India's cash in 2016, he sparked a currency crisis that led to huge job losses, stalled growth and hit India's vast informal sector.

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Thousands of SME units were shut down, lakhs of jobs were destroyed and the Indian economy lost 1.5% of GDP in terms of growth, Chidambaram said in another tweet.

In August 2017, while defending demonetisation, the government had said that close to Rs 3 lakh crore, which was earlier not part of the banking system, had been deposited in banks.

In a series of tweets, the former finance minister also said RBI figure has suggested that the government had actually demonetised only Rs 13,000 crore and the "country paid a huge price" for it.

Tewari claimed as a outcome of the demonetisation exercise, the dividend paid by the RBI to the government of India was halved from Rs 65,876 crore in 2015-16 to Rs 30,659 crore in 2016-17.

He said for the Rs 13,000 crore, which did not come back to the banks, the country lost Rs 2.25 lakh crore worth of GDP, crores of jobs and over a hundred lives. "I think demonetisation achieved its objectives quite substantially", he said.

"Around Rs 16,000 crore of demonetised notes were not received". The government, while announcing demonetisation, had also cited checking counterfeit notes as one of the reasons.

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".

Other reports by MaliBehiribAe

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