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

Economy       Rs 13,000 crore – the amount of currency banks did not get back after demonetisation
       	        Mahua Venkatesh         29 August 2018

The news was revealed in the Reserve Bank of India's (RBI) annual report, published Wednesday, which indicated an inter-departmental unit has already been formed within the organization to study the "desirability and feasibility to introduce a central bank digital currency". The report also states that the total value of money returned was Rs 15.3 lakh crore against Rs 15.4 lakh crore that was in circulation on Nov 8, 2016.

Modi has said the cash ban was a success because "our intention was to bring all money into the formal banking system and we achieved success in completing the task". The SBNs received were verified, counted and processed in the sophisticated high speed CVPS (currency verification and processing system) for accuracy and genuineness, and shredded and briquetted in the shredding and briquetting system, it said.

About Rs 15.21 lakh crore of the demonetised Rs 15.41 lakh crore in circulation have been returned to banks, says RBI. "The total value of SBNs returned from circulation is Rs 15,31,073 lakh crore", the central bank said. (The) RBI report again proves that demonetisation was a "Modi-made disaster" of epic proportions.

When Indian Prime Minister Narendra Modi announced the replacement of 80 per cent of India's cash in 2016, he sparked a currency crisis that led to huge job losses, stalled growth and hit India's vast informal sector. Currency notes of higher value are easier to hoard, and can be used to proliferate black money. "Lakhs of jobs were destroyed", Chidambaram said.

"Remember who had said that Rs 3 lakh crore will not come back and that will be a gain for the government?" he said, taking a dig at Modi.

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"During 2017-18, as many as 522,783 pieces of counterfeit notes were detected in the banking system, of which 63.9 per cent were detected by banks other than the Reserve Bank", the RBI said.

Making a sharp attack on the Modi government on demonetisation, former Finance Minister P. Chidambaram on Wednesday said the country paid a "huge price" for cancelling what turned out "a small sum" of Rs 13,000 crore.

"Whether demonetisation has failed or not depends on its objective". The government, while announcing demonetisation, had also cited checking counterfeit notes as one of the reasons. This meant just Rs 10,720 crore of the junked currency did not return to the banking system.

The overall notes in circulation added up to Rs 18.03 lakh crore as on March 2018, displaying a growth of 9.9 per cent over March 2016.

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".

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