Reserve Bank of India Governor Urjit Patel told the Parliamentary Standing Committee on Finance here on Wednesday that about ₹9.2 lakh crore had been put back in circulation since the demonetisation on November 8.
Prime Minister Narendra Modi’s announcement that ₹500 and ₹1,000 notes would cease to be legal tender from the midnight of November 8 had sucked out 86% — amounting to ₹15.44 lakh crore — of currency notes in circulation till then.
Dr. Patel, however, did not offer any answer to questions on how much of the demonetised currency had been deposited back in banks, saying calculations were still on. He maintained that counting of the notes was continuing, a panel member said, making it appear that this itself was a mammoth task.
Manmohan intervenes
A member said that when Dr. Patel was asked the date on which the RBI would withdraw the ₹24,000 cap on weekly withdrawals, former Prime Minister Manmohan Singh said the central bank governor need not go into that.
Members maintained that the meeting — lasting from about 2.15 p.m. to 4 pm — was more about questions than answers.
“He did not answer most questions. We may have to call him once again and seek written responses to the several questions we have,” said a member of the committee.
There have been media reports that 97% of the demonetised currency was back in the system, though the RBI rejected these claims.
The central bank’s argument is that “figures would need to be reconciled with the physical cash balances to eliminate accounting errors/possible double counts, etc”, without which estimates may not indicate actual numbers.
The figures pertaining to money deposited back are crucial as the Opposition is reading the reported return of almost all the money as a sign that black money has been turned white.
It is also seen as indicating that the liability of the RBI has not been extinguished, denying the government the fiscal space for greater social sector spending.
The government, however, claims that once the money has passed through the system, it will be scrutinised to catch the wrongdoers. Dr. Patel said the demonetisation decision by the government and the RBI — taken at the behest of the government — took about one year to plan, a member of the panel told The Hindu. The printing of ₹2000 notes had begun in June 2016, he added.
(With inputs from Vikas Dhoot)
