The Reserve Bank of India’s annual report has finally revealed that as much as ₹15.28 lakh crore of the high-value currency that was demonetised in November returned to the central bank.
“Subject to future corrections, based on the verification process when completed, the estimated value of SBNs [specified bank notes] received as on June 30, 2017, is ₹15.28 trillion,” the RBI said in a report released on Wednesday.
Intense scrutiny
The central bank was under intense scrutiny since January — after the window for depositing the withdrawn ₹500 and ₹1,000 banknotes had closed — for details on the extent of currency that was returned to the RBI in the wake of the government’s sudden decision to withdraw high-value banknotes as a means to combating counterfeiting, black money and the financing of terrorist activities.
The latest RBI data showed that 98.96% of the withdrawn currency — at the time of demonetisation the value of old ₹500 and ₹1,000 notes in circulation was ₹15.44 lakh crore — was deposited with the banks.
Separately, the data showed that the share of the newly introduced ₹2,000 banknotes in the total value of currency in circulation was 50.2% at end-March 2017.
Finance Minister Arun Jaitley said on Wednesday that the confiscation of money was never the objective of the demonetisation exercise. “That people have been compelled to deposit even black money into banks is itself a good evidence of its [success].”
Mr. Jaitley said that the high growth in income tax returns and the robust GST inflows indicated that more and more people now preferred to undertake ‘white money’ transactions.
“With RBI disclosing the numbers of returned notes today [Wednesday] and the measure having been successfully implemented, the debate should be over,” said Economic Affairs Secretary Subhash Garg. Mr. Garg called for a conclusion of note-ban linked arguments as the “short-term negative impacts on economic activity had played out fully and long-term positives will continue to strengthen fundamentals.”
The final deposit figures could still rise since on June 20, 2017, the government allowed District Central Cooperative Banks to deposit the withdrawn notes that had been accepted by them from customers between November 10-14.
The central bank also said it was in discussion with the government whether to accept the demonetised notes held by citizens and financial institutions in Nepal. Data in the annual report showed that only 89 million pieces of ₹1,000 were not deposited.
The politics of demonetisation
As of March 2016, there were 6,326 million pieces of ₹1,000 banknotes in circulation. In 2016-2017, another 925 million pieces of ₹1,000 notes were supplied into the system by the currency printing presses.
