The banned 500- and 1,000-rupee notes have been turned into banks, according to a report by Bloomberg. If that is true, it would suggest that the government’s abrupt demonetisation drive has failed to uncover and destroy black money.
“I don’t know” was Finance Minister Arun Jaitley’s response yesterday when asked if the estimate is correct. The Reserve Bank of India said today that it is still collating and verifying information.
On November 8, Prime Minister Narendra Modi announced that the highest-denomination notes would be illegal within hours; he set a deadline of December 30 to exchange or deposit the old notes at bank branches and post offices. The cancelled notes added up to 86 percent of the currency in circulation or 15.5 lakh crores. With the deadline for turning in notes having expired, unnamed sources told Bloomerberg that 15 lakh crores have been accounted for in deposits.
Neither the government nor the Reserve Bank of India or RBI has officially disclosed how much of the junked money has been returned. On December 14, the RBI said that about 12.5 lakh crores had been deposited. “Now that the Scheme has come to an end on December 30, 2016, these figures would need to be reconciled with the physical cash balances to eliminate accounting errors/ possible double counts etc. RBI has already initiated this process and till this is completed any estimate may not indicate the actual numbers of the SBNs (Specified Bank Notes) that have been returned,” the central bank said in a statement today.
On the last day of demonetisation, the RBI had asked all banks to report details of deposits of old Rs. 500 /1,000 notes after the close of banking hours.
Though PM Modi has been praised by experts and the public for his intent to crackdown on corruption and tax evasion, the cash shortage that followed demonetisation has been seized by the opposition to allege that it is the honest and common man rather than the corrupt rich who have been punished by the radical reform.