Mumbai: BJP led government had banned old currency of high denominations last November, but the impact is lingering to India’s GDP. Which has gone down to the all time low as 5.7 percent growth in quarter one in past three years.
In a poll by Reuters, the GDP was expected to be 6.6 percent in the June quarter, however, it hit even lower. Former RBI Deputy Governor R Gandhi said demonetisation will have a long-term impact. But expectations of various quarters that sizable portion of the demonetised currency won’t return has not been fulfilled.
The Reserve Bank, which did not disclose the actual number of scrapped currency deposited after November 8 last year, said in its Annual Report for 2016-17 that Rs 15.28 lakh crore of wiped currency had come back into the banking system, leaving only Rs 16,050 crore out.
According to a report by The Hans India, there were 1,716.5 crore currency notes of Rs 500 and 685.8 crore notes of Rs 1,000 in circulation on November 8, 2016.
The RBI spent Rs 7,965 crore in 2016-17 on printing new Rs 500, Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year.
The flushing out of the old currency high denomination notes was aimed to curb black money, corruption and check counterfeit currency, but RBI said just 7.1 pieces of Rs 500 note per million in circulation and 19.1 pieces of Rs 1,000 notes per million in circulation were found to be fake in its sample survey.
RBI said just 8.9 crore pieces of Rs 1,000 notes or 1.3 percent of the scrapped ones have not returned. It, however, did not give a specific number for the old 500 rupee notes.
“Subject to future corrections based on verification process when completed, the estimated value of specified bank notes (SBNs) received as on June 30, 2017 is Rs 15.28 trillion,” the central bank said.
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RBI said its income for 2016-17 decreased by 23.56 percent while expenditure jumped 107.84 percent, due to the printing of new notes. “The year ended with an overall surplus of Rs 306.59 billion as against Rs 658.76 billion in the previous year, representing a decline of 53.46 percent,” it said.
The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1,000 notes have been made. Instead, a new Rs 2,000 note was introduced. There were 1,570.7 crore Rs 500 notes in circulation, and as many as 328.5 crore pieces of new Rs 2,000 notes were in circulation as on March 31, 2017. Besides, new Rs 500 and Rs 2,000 notes, the RBI has also circulated new Rs 200 notes last week.
The opposition was quick to seize on the data to attack the government with former finance minister P Chidambaram saying, “RBI ‘gained’ Rs 1,6000 crore, but ‘lost’ Rs 21,000 crore in printing new notes! The economists deserve Nobel Prize. Rs 16,000 cr out of demonetised notes of Rs 15,44,000 cr did not come back to RBI.That is 1 percent. Shame on RBI which ‘recommended’ demonetisation,” he tweeted.
Chidambaram also wondered if demonetisation was “a scheme designed to convert black money into white?”.
Slamming the Opposition, Finance Minister Arun Jaitley said that people with an inadequate understanding of how to tackle black money linked note ban with money returned to the system. He said the demonetisation was not a move to confiscate currency, and further said that India was predominantly a cash economy and that condition needed to be altered to give a blow to black money.