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Demonetisation: Ten figures that underline impact of PM Modi’s note ban

The disruption demonetisation had caused raises questions over the overall gains made and its impact on the economy.

By: Express Web Desk | New Delhi | Updated: August 31, 2017 12:35 pm
The disruption demonetisation had caused raises questions over the overall gains made and its impact on the economy. (file photo)

Belying the expectations of the government that a significant amount of currency held by people would not return to the banking system, the RBI on Wednesday announced that 99 per cent of the demonetised Rs 500 and Rs 1,000 notes were deposited or exchanged.

As on June 30, 2017, notes worth Rs 15.28 lakh crore were deposited by people, according to RBI’s annual report. At least Rs 16,000 crore did not return to the system as the total value of Rs 500 and Rs 1000 notes in circulation was Rs 15.44 lakh crore. And RBI spent Rs 7,965 crore, nearly half of the Rs 16,000 crore gain, for printing new notes between July 2016 and June 2017.

Scrapping of the higher denomination notes had caused immense hardship for the public due to the slow pace of remonetisation. Squeezing the cash meant long queues outside ATMs and businesses taking a hit as the country’s economy was largely cash-driven.

The disruption it caused raises questions over the overall gains made and its impact on the economy.

After the country’s GDP growth fell close to two per cent, this year’s midterm economic survey had indicated that the impact from demonetisation is between 1/4 and 1/2 percentage points relative to the baseline of about 7 per cent.

Defending the demonetisation move, the government had repeatedly said it would curb terror financing and dent the drug trafficking industry as they heavily rely on counterfeit notes.

In July, the RBI told a parliamentary committee that ending the counterfeit currency menace was one of the reasons for accepting the govenrment’s demonetisaton move. The bank said that it was becoming increasingly difficult to differentiate between genuine notes and fake notes.

Despite the RBI stating in its report that counterfeit notes detected was 20.4 per cent higher than the previous year, the value of the fake demonetised Rs 500 and Rs 1000 notes in 2016-17 was just Rs 41 crore.

Meanwhile, Union Finance Minister Arun Jaitley, on Wednesday, said that one of the principal objects of demonetisation was to gradually bring down the quantum of cash operating in the system and an integration of the informal economy with the formal one where progress has been achieved.

“The object of demonetisation was not confiscation of money. The object of demonetisation was that India is predominantly a high-cash economy and, therefore, that scenario requires to be significantly altered,” he told reporters after the release of Reserve Bank of India’s Annual Report for 2016-17.

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  1. Annu Chopra
    Sep 2, 2017 at 7:08 am
    DEMONETISATION MATHS FOR DUMMIES Total cash in circulation in india prior to demonetisation A B C A Notes officially published B Notes unofficially published C Fake notes published by countries like pakistan etc. ONLY amount of “A” is known. B and C amount may be even more than A 99 of known A category AMOUNT has been deposited in banks. Hence, demonetisation has been effective .
    1. Amitabha Bhattacharjee
      Aug 31, 2017 at 7:34 pm
      "99 per cent of the demonetised Rs 500 and Rs 1,000 notes were deposited or exchanged." Actual figure will be higher because RBI has not received many demonetized notes from co-operative banks and secondly they have not considered demonetized notes received from NEPAL
      1. R
        Aug 31, 2017 at 4:11 pm
        Fekus Stupid Government like Mohamad Tuglakh took a b er decision which is totally exposed now. and they can not hide from their responsibility any more . These guys are highly inexperience lot to run the Government for our Country and shall resign immediately by taking responsibility and calling for General Elections. Our Country is Economically killed and send back to 10 years back levels as GDP is significantly reduced and continue to fall with significant Job losses and closure of companies . Now they would say Digital Economy , Increase In Taxes and so on which every one knows is a total bluff and manipulated
        1. P
          Aug 31, 2017 at 2:34 pm
          with demonetisation withdrawal of high curreny notes should be withdrawn only Rs20 and below denomination notes should be placed in market other payment either by cheques or though on line as 4G phone are avaible shortly with very small price now Govt should subsidice phonecharge for the very poors Then the Nation would becruptfree.
          1. G
            Aug 31, 2017 at 2:13 pm
            Make the farmers, who have more than 10 acres of agricultural land to pay the tax. Make the trust, charitable or general, to pay the tax. Everyone should pay their share/dues. In the current system only ried class is labelled as 'tax payers' or 'tax evaders' and everyone else including the richest enjoy these 5 tax payers' sweat. It is the high time for our nation to practice a common yardstick, where everyone is treated as equals / 'Indians'.
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