Demonitisation fails as 99% of notes remian unaccounted- RBI report

Posted September 02, 2017

At the Reserve Bank's currency verification and processing system during 20156-16, there were 2.2 pieces of FICNs of Rs. 500 denomination and 5.8 pieces of FICNs of Rs. 1000 denomination for every million pieces of notes processed; which rose to 5.5 pieces and 12.4 pieces respectively during post demonetization period.

All the four reasons which the Prime Minister had given have proved to be false, and he inflicted misery upon the people of India, wrecked the country's economy, shaved off 1.5% of India's GDP which was equivalent to 2Lakh 25 thousand crores, the Congress leader said.

Sharma stressed it was the prime minister's "direct responsibility" as it was his personal decision to implement note ban.

"The government has changed the goalposts more times than they can count", P. Chidambaram, finance minister under the previous Congress party government, told Reuters.

Measuring the success of demonetisation on the basis of how much cash has come into the system shows "an inadequate understanding", finance minister Arun Jaitley said.

He said Modi had promised to unearth black money and end corruption, terror funding and counterfeit currency.

At the time, officials said that at least 20 percent of the outlawed currency was expected to be wiped out as tax evaders destroyed notes rather than open themselves to scrutiny by depositing the cash.

Also read:SBI, HDFC Chairman disappointed with RBI policy say it will derail economy.

"99% notes legally exchanged!"

While addressing the press, Jaitley said the aim of demonetisation was not to destroy wealth.

The Opposition on Thursday stepped up its attack on the government over the RBI's annual report that revealed low efficacy of demonetisation, with the Congress terming the move to junk high currency notes as the "biggest scam" and the CPI-M demanding a "black paper" on the issue. As of June 30, total demonetised currency which returned back to the system stood at Rs 15.28 lakh crore.

He also said that the manufacturing industry is continuously contracting and that "Make in India" continues to remain a slogan.

"Earlier in the UPA we had an "arthshastri" (economist) as Prime Minister and today we have a "pracharshastri" (propagandist) as Prime Minister, " Mr Sharma said. It spent 132.8 per cent more on printing new notes - Rs 7,965 crore during 2016-17 compared to Rs 3,421 crore in the preceding year. CPI (M) chief Sitaram Yechury said demonetisation was an "anti-national" measure, which caused the nation unprecedented pain and agony. Instead just Rs 1,600 crore has not re-entered the banking system. There were countless tragedies-postponement of marriages, as people did not have money or jobs, the inability of people to get treatment, failure to pay fees and most importantly the inability of cooperative banks to dispense cash to small businesses in states like Kerala and Maharashtra.

C Rammanohar Reddy, an economist and the author Demonetisation and Black Money, published in March, said the government's reckoning was off in other ways as well.

The RBI annual report said that "subject to future corrections based on verification process when completed, " the estimated value of the banned notes it "received" was Rs15,28,000 crore.

RBI said its income for 2016-17 decreased by 23.56 per cent while expenditure jumped 107.84 per cent.