P Chidambaram Slams Centre Over RBI Report On Demonetisation

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. Over 100 lives were lost. Crores of daily wage earners lost their jobs and the country lost 1.5 pc of GDP growth that translates into Rs 2.25 lakh crore per year, he claimed.

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

"So, government and RBI actually demonetised only Rs 13,000 crore and the country paid a huge price". Thousands of SME (small and medium enterprises) units were shut down. The total value of such notes returned from circulation is Rs. 15.31 lakh crore.

"Remember who had said that Rs 3 lakh crore will not come back and that will be a gain for the government?" he said, taking a dig at Modi.

The Reserve Bank of India in its annual report said that as many as 99.3 per cent of the old 500 and 1,000 rupee notes, that were banned overnight in November 2016, have been returned.

Tewari claimed as a effect 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.

West Bengal chief minister Mamata Banerjee said her apprehensions about the impact of demonetisation on the Indian economy had been held true by RBI report. "Today, RBI in its annual report has vindicated our apprehension", Banerjee wrote on her Facebook page.

"During 2017-18, as many as 522,783 pieces of counterfeit notes were detected in the banking system, of which 63.9 per cent were detected by banks other than the Reserve Bank", the RBI said.

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. "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". But the goal posts kept shifting in the weeks and months since with the government citing several reasons to demonetise high value notes such as to choke terror funding, bribery, increasing tax base and checking counterfeit notes. The share of Rs. 500 notes, in terms of value, increased from 22.5% to 42.9% in the same period. "According to the report", In the evolution of monetary aggregates, currency in circulation surpassed its pre-demonetisation level while credit growth revived to double digits from a historic low in the previous year".

  • Eleanor Harrison