Chidambaram slams govt after RBI says 99.3% demonetised notes returned

Aug 31, 2018, 02:14
Chidambaram slams govt after RBI says 99.3% demonetised notes returned

Over 21 months after Rs 500 and Rs 1,000 notes were withdrawn from circulation on November 8, 2016, the Reserve Bank of India (RBI) on Wednesday said that almost all of that money has returned to the banking system. "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. Thousands of SMEs were shut.

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. Besides, the value of bank notes in circulation has increased by 37.7% over the year, reaching Rs 18,037 lakh crore by the end of March 2018.

The Indian economy lost 1.5% of GDP growth that accounted for a loss of Rs 2.25 lakh crore a year, he said.

"So, government and RBI actually demonetised only Rs 13,000 crore and the country paid a huge price".

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.

The news was revealed in the Reserve Bank of India's (RBI) annual report, published Wednesday, which indicated an inter-departmental unit has already been formed within the organization to study the "desirability and feasibility to introduce a central bank digital currency".

He added that the bulk of Rs 13,000 crore which was not returned may also not be black money but the currency in Nepal and Bhutan and some which may have been lost or destroyed.

"The PM had promised that black money, terror funding, and fake currency will be eradicated", Congress chief Rahul Gandhi, the fourth-generation politician from the fabled Nehru-Gandhi dynasty, told a news conference.

Quoting RBI report, the Trinamool Congress supremo said 99.3 per cent of the demonetised money has come back to the banking system. The indent for Rs 2,000 notes also fell 15.1 crore pieces in 2017-18 from 350.4 crore a year earlier. "I think demonetisation achieved its objectives quite substantially", he said.

The detection of counterfeit notes in the Rs 50 and Rs 100 denomination witnessed a record high in 2017-18 compared with two preceding fiscals, the RBI announced on Wednesday.

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