P Chidambaram Slams Centre Over RBI Report On Demonetisation

Demonetisation Flawed in planning not in principle

The widely used Rs 500 and Rs 1,000 notes were withdrawn from circulation in a shock announcement in August 2016, leaving the public only a couple of months to bank their cash before it became obsolete - resulting in riots as queues snaked around bank branches, leaving almost 100 people dead.

Garg said there were benefits in the process with major advantage being induction of newer notes with more security features, "virtually weeding out all the fake currency". "Remember who had said that Rs 3 lakh crore will not come back and that will be a gain for the government", the Congress leader said in a series of tweets.

In its report released on Wednesday, RBI said the proportion of Rs 2000 notes in circulation has fallen to 37 per cent of the total currency from 50 per cent past year.

Finance Minister Arun Jaitley, one of Modi's top trouble shooters, said demonetisation had helped India to move from a "tax non-compliant society to a tax-compliant society". "Lakhs of jobs were destroyed", he tweeted.

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.

In the weeks and months after Mr Modi's bombshell announcement, small businessmen said their customers stopped coming because they had no cash.

"So, government and RBI actually demonetised only Rs 13,000 crore and the country paid a huge price". Thousands of SMEs were shut. The indent for Rs 2,000 notes also fell 15.1 crore pieces in 2017-18 from 350.4 crore a year earlier.

"I suspect that the bulk of the Rs 13,000 crore is currency in Nepal and Bhutan and some that was lost or destroyed".

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.

Notwithstanding the fact that only over Rs.10,000 crore of demonetised money did not come back to the RBI, government on Wednesday claimed that it has achieved the targets it had set in its decision, including checking black money, counterfeit currency and terror funding while encouraging digital transactions. The amount was higher in FY17 due to demonetisation, which forced the RBI to print more new notes.

The Reserve Bank of India's annual report for 2017-18 said more than 99% of the Rs. 500 and Rs. 1,000 notes, which were withdrawn from circulation in November 2016, had been returned to the central bank.

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

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