The Reserve Bank of India (RBI) has released its annual report which reveals that Demonetisation process from the perspective of money not returned to the system may have been a failure. According to the central bank report, only Rs 16,000 crore demonetised currency didn’t find its way back into the banking system. And the government spent Rs 7,965 crore in printing new currency notes.
This means that the total windfall for the government on this front was only Rs 8,000 crore. On 8 November last year, Prime Minister Narendra Modi had announced withdrawal of Rs 1,000 and Rs 500 currency notes from midnight sucking 86 per cent of total currency in circulation which stood at Rs 15.44 lakh crore. Now, the annual report of the RBI says that out of this, Rs 15.28 lakh crore returned to the banks.
The report says that this year, unusually high number of counterfeit notes were detected. The report mentions that 7.62 lakh pieces of counterfeit currency notes were detected in Fiscal Year (FY) 2017, more than one lakh higher compared to 6.32 lakh pieces detected last fiscal.
The effective amount of demonetised currency which didn’t return to the banks stand at mere Rs 8,000 crore when many economic experts and those in the government were expecting a figure in the range of Rs one to 1.5 lakh crore. This is a big blow to the those who were expecting that the government will reap a huge windfall from the demonetisation initiative.
However, Finance Minister Arun Jaitley has said multiple times that just because money has been deposited by people doesn’t mean it is legitimate. Earlier this year, the government had suggested that over lakh lakh accounts may be under scanner of income tax authorities. Data analysis had found that people had made suspicious deposits of over Rs five lakh during the 50-day window in these accounts.