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Chidambaram slams RBI: Asks if demonetisation was for converting black into white

Chidambaram slams RBI: Asks if demonetisation was for converting black into white

Out of 632.6 crore pieces of Rs 1,000 currency notes in circulation, 8.9 crore haven't yet returned to banks.

In a surprise announcement on November 8 previous year, Prime Minister Narendra Modi had scrapped high-value currency notes, a step that the government claimed was taken to fight terrorism, rein in black money and even increase the taxpayer base.

In view of the withdrawal of legal tender character of almost 86 percent of value of notes in circulation on November 8, 2016, the focus of the Reserve Bank subsequently shifted to making available banknotes generated from printing presses to currency chests and from there to bank branches and ATMs in the shortest possible time.

The RBI said that only 1.3% of the demonetised Rs 1000 currency notes have not been returned. Post demonetisation, the currency in circulation fell to Rs 9 trillion on January 6, 2017, a level which was seen more than six years ago. The share of the newly-introduced Rs 2,000 banknotes in the total value of banknotes in circulation was 50.2 per cent at end-March 2017. RBI said its income for 2016-17 decreased by 23.56 per cent while expenditure jumped 107.84 per cent.

The Centre on Nov 8 banned Rs. 1000 and old Rs. 500 currency notes.

This means that 0.16 lakh crore or Rs 16,000 crore was not deposited back to the banks.

The RBI also launched Rs 200 notes on Friday, August 25.

Former RBI Deputy Governor R Gandhi said demonetisation will have long-term impact. Unearthing of fake currency through demonetisation has also turned out to be muted.

The move that shook the nation seems like the black money holders were more benefited because the government showed them the way to convert their black in to white using proxies.

"That is 1 per cent. Shame on RBI which "recommended" demonetisation", he tweeted.

In percentage terms, it is 1.4 percent of the now-defunct Rs 1,000 notes which is missing from the banking system.

In a statement, the finance ministry said on Wednesday that the effective currency in circulation today is only 83 per cent with full remonetisation having taken place. "The objective was to bring down the cash in the economy, bring in digitisation, expand the tax base and fight black money".

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