Annual report of the Reserve Bank of India has revealed the data on amounts retrieved after the recent demonetisation drivestarting from November 8 last year. Almost 99% of currency in circulation came back into the banking system in respect of Rs 1,000 notes. At the end of March 2017, there was Rs 8,925 crorei.e. mere 1.3%worth of Rs 1,000 notes were not deposited with the banks after note-bandi. In other words, 98.7% of all 1,000 rupee notes came back to RBI after demonetization.
A similar calculation cannot be done for Rs. 500 notes because there were new notes for Rs. 500, unlike the Rs 1,000 notes, and the data does not give us a break-up of old and new notes.If 99% of the Rs 1,000 notes were returned, there is no reason to think that Rs. 500 notes would be different in any significant way.
In other words, almost all the old 500 and 1,000-rupee notes appear to have been officially returned. Negligible 'black money' has been unearthed.The total value of demonetised currency on November 8, 2016 was Rs 15.4 lakh crore. Of this, Rs 1,000 notes made up about 44% and Rs 500- notes 56%.
The final deposit figures could still rise with influx of money from District Central Cooperative Banks. This is because, these banks were recently allowed to deposit withdrawn notes that they had accepted for a few days after demonetisation after which it was stopped. Also, RBI is in discussions with the government to further accept the demonetised notes held by citizens and financial institutions in Nepal.
It was considered as demonetization will increase digital transactions and promotes less cash economy. However, the surge in digital transactions during the demonetisation period is seeing a sharp reversal. The decline in electronic payments is seen as reflective of the improved cash availability situation.
Demonetization has cost the government around Rs. 8000 crore for printing new notes during the period July 2016-June 2017.It badly hit on the unorganized sectorthat was dependent on cash transactions. It also bringing down private investment to business.
Note ban has brought down India's economic growth rate to 6.1 per cent during January-March 2017. However, the real impact could be much more as 'India's statistical machinery does not capture data on the informal economy on a regular basis'.
Data analysis of bank deposits and sudden increase in cash deposits has thrown light on holdings of black money. The reports by banks are also helping in identification of shell firmsand taking necessary actions against money laundering activities. Speaking on Foundation Day of Institute of Chartered Accountants of India, Prime Minister NarendraModi said that the government is committed to more tough action against firms helping in hiding black money. He said data mining shows that over three lakh registered companies indulged in suspected dealings. Government has cancelled registration of over one lakh companies in a single stroke and more than 37,000 shell firms have been identified for strong action.
Source: The Times of India, The Indian Express