RBI’s latest report is clinching evidence that demonetisation was a failure

Economy       Rs 13,000 crore – the amount of currency banks did not get back after demonetisation
       
       	        Mahua Venkatesh         29 August 2018

The indent for Rs 2,000 notes also fell 15.1 crore pieces in 2017-18 from 350.4 crore a year earlier. "15 crore daily wage earners lost their livelihood for several weeks", he said. It was said that this amount would be over Rs 3 lakh crore.

This means that just Rs 10,720 crore of the junked currency notes did not return to the banking system.

Criticising the demonetisation exercise, former Finance Minister P Chidambaram said: "Every rupee of the Rs 15.42 lakh crore has come back to the RBI".

Demonetisation led to long queues outside banks. Thousands of SME (small and medium enterprises) units were shut down.

It must be noted that the Reserve Bank of India (RBI) today said in its 2017-18 annual report that 99.3 per cent of banned notes were returned in the banking system after demonetisation.

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.

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Notwithstanding the fact that only over Rs.10,000 crore of demonetised money did not come back to the RBI, government on Wednesday claimed that it has achieved the targets it had set in its decision, including checking black money, counterfeit currency and terror funding while encouraging digital transactions. 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.

Speaking of the Indian economy, the annual report said that there are upside risks to inflation which requires vigilance.

"As soon as the draconian demonetisation was announced on November 8, 2016, I immediately sensed by intuition that this is a big anti-people measure". "All reports on (black money) categorically stated that the undeclared incomes were mostly invested in properties and assets in India and overseas, and in gold and jewellery". "The entire trade sector functions on cash, a sizeable portion of which is black money".

But the move, widely known as demonetisation, badly hurt India's cash-dependent economy and caused tremendous hardship to people forced to line up outside banks before the notes ceased to be legal tender.

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.

Asked about reports of fake notes presented to the banks post-demonetisation, Garg said a year ago in a RBI report it was said, that all the notes were verified and the amount of fake notes was "minuscule and ignorable".

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