Opposition questions the efficacy of demonetisation in curbing black money
Congress supporters shout slogans during a protest on the eve of the first anniversary of the demonetisation scheme in Mumbai on November 7, 2017. File Pic/AFP
Almost all the 500 and 1,000 currency notes that were made illegal in November 2016 have returned to the banking system, the RBI said on Wednesday, prompting the Opposition to question the efficacy of demonetisation in curbing black money. Banks received Rs 15.31 lakh crore, or 99.3 per cent of the '15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, when the note ban was announced, it said.
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This meant just Rs 10,720 crore of the junked currency did not return to the banking system as against initial estimates of about Rs 3 lakh crore would not return to the system as they may have been stashed away illegally to avoid tax.
After the November 8, 2016, decision, the government gave a limited period window to first exchange any old currency in possession and then deposit them in bank accounts. Also the junked currency was allowed to be used in utilities like for buying petrol and diesel at petrol pumps and paying for hospital and electricity bills as well as bus fare on state road transport buses. The currency returned is a combination of deposits made in banks, notes exchanged and those used to pay utility bills.
Post-demonetisation, RBI spent Rs 7,965 crore in 2016-17 on printing new Rs 500 and Rs 2,000 and other denomination notes, and another Rs 4,912 crore in 2017-18, according to RBI's 2017-18 report. The printing of new notes reduced RBI's profit and cut annual dividend. It transferred Rs 50,000 crore to the government in the year to June 30, 2018, as compared to Rs 30,659 crore in the 12 months. RBI, whose accounting year runs from July to June, had spent Rs 3,421 crore on printing currency notes in 2015-16.
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