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

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

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

Similarly, 9,892 pieces of counterfeit notes were detected in the new Rs 500 banknotes in 2017-18 - a 4178 per cent jump from 199 in the previous fiscal. The task of processing SBNs was achieved with the co-ordinated efforts put in by the workforce of the Issue Department of the Reserve Bank, it added. "The total value of SBNs returned from circulation is Rs 15,310.73 billion" the RBI report said.

Congress chief spokesperson Randeep Surjewala said the prime minister in his 2017 Independence Day speech had claimed that over Rs 3 lakh crore unaccounted money will come back to the system.

His comments came after the RBI in its annual report said that 99.3 per cent of the Rs 15.3 lakh crore taken out of circulation in November 2016 has returned to the central bank. "That alone was a loss of Rs 2.25 lakh crore [2.25tn] a year". More than 400 cases were referred to the Enforcement Directorate (ED) that arrested 18 evaders, while the Central Bureau of Investigation (CBI) arrested 38 people - insignificant numbers, but definitely a beginning.

Garg said that the major advantage of demonetisation was that new notes have more security features.

The RBI's annual report, however, indicates that demonetisation has not made a huge dent in this regard, as the proportion of high-value notes is marginally lower now than what it was pre-demonetisation. This increased to 80.2% at the end of March 2018, according to the report. The volume of banknotes, however, increased by 2.1 per cent.

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While The Wire has over the last eighteen months reported and analysed how India's currency-in-circulation (CiC) and currency-to-GDP ratio has not changed drastically after demonetisation, the RBI's annual report provides further proof of how little things have changed.

Digital transactions have grown, but the RBI found the value of banknotes in circulation had also increased in the past year by 37.7%. More than 100 lives were lost in the panic to exchange old notes for new ones, millions of daily-wage earners lost their livelihood for several weeks, thousands of small and medium enterprises were shut down and many jobs were destroyed, he said via Twitter.

The demonetisation was hailed as a step that would curb black money, corruption and check counterfeit currency but RBI said, "Counterfeit notes detected in SBNs decreased by 59.7 and 59.6 per cent in the denominations of Rs 500 and Rs 1,000, respectively".

"... India's currency to GDP ratio moved up to 10.9 per cent in 2017- 18, returning to being amongst the highest levels of currency usage in peer emerging market economies (EMEs) and advanced economies (AEs) as well".

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