Chidambaram slams govt after RBI says 99.3% demonetised notes returned

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

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

According to the Reserve Bank of India's (RBI) annual report for 2017-18, the number of fake Rs 50 notes detected shot up 154.3 per cent to 23,447 pieces, as against 9,222 notes detected in 2016-17 and 6,453 in 2015-16.

The government had introduced Rs 500 and Rs 2000 notes after demonetisation, which absorbed 85 per cent of the old currency notes from the economy.

RBI in its annual report for 2017-18 said counting the demonetised notes is over.

Modi has said the cash ban was a success because "our intention was to bring all money into the formal banking system and we achieved success in completing the task".

The SBNs received were verified, counted and processed in the sophisticated high speed currency verification and processing system (CVPS) for accuracy and genuineness and then shredded, it added.

The widely used Rs 500 and Rs 1,000 notes were withdrawn from circulation in a shock announcement in August 2016, leaving the public only a couple of months to bank their cash before it became obsolete - resulting in riots as queues snaked around bank branches, leaving almost 100 people dead.

Chidambaram said every rupee of the Rs 15.42 lakh crore, barring a small sum of Rs 13,000 crore, has come back to the RBI.

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. Thousands of SME (small and medium enterprises) units were shut down. Lakhs of jobs were destroyed.

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.

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

The RBI, after an awfully long period of counting of returned bank notes, said today that as much as 99.3% of the junked notes have returned to the banking system. The government, while announcing demonetisation, had also cited checking counterfeit notes as one of the reasons.

"Whether demonetisation has failed or not depends on its objective". This meant just Rs 10,720 crore of the junked currency did not return to the banking system. RBI data showed that the value of banknotes in circulation increased by 37.7% over the year to Rs. 18.04 lakh crore at end-March 2018.

The party said the return of nearly all the junked notes meant that the government had failed to unearth any black money, check terror financing and eradicate fake currency as promised by Modi while announcing noteban.

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