RBI’s latest report is clinching evidence that demonetisation was a failure

RBI’s latest report is clinching evidence that demonetisation was a failure

The total value of SBNs in circulation as on November 08, 2016, post verification and reconciliation, was Rs 15,417.93 billion. This is in sharp contrast to the government's push for digitisation and a less-cash economy.

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.

Political parties were quick to corner the BJP-led Narendra Modi government that demonetised high-value currency notes to curb black money. All the notes which have been received have been counted. The thinking behind this theory was that if a certain amount of the demonetised currency didn't come back into the system - if it was dumped in a river or burnt to ashes because its owners were afraid of being caught with black money - it would reduce the RBI's liabilities.

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

Former finance minister P Chidambaram claimed that more than 100 lives were lost and lakhs of jobs were destroyed due to closure of businesses after demonetisation.

The RBI, in its previous annual report released, in August 2017 had stated that Rs 15.28 lakh crore, or 99 per cent of the demonetised currencies totally worth Rs 15.44 lakh crore, had returned to the banks by 30 June 2017.

"The total SBNs returned from circulation is Rs 15,310.73 billion", the RBI said in its report. Remember who had said that Rs 3 lakh crore will not come back and that will be a gain for the government? "The entire trade sector functions on cash, a sizeable portion of which is black money".

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. It is a natural process as the GDP grows, payment system grows, currency grows.

Thousands of SME units were shut down, lakhs of jobs were destroyed and the Indian economy lost 1.5% of GDP in terms of growth, Chidambaram said in another tweet.

The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1,000 notes have been made.

Apart from the currency figures RBI Annual Report for the year, 2017-18 stated that 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.

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