The Reserve Bank of India has issued the first figure related to demonetization after about 10 months of the ban on currency notes of 500 and 1000. The central bank said on Wednesday that the value of the notes (500 and 1,000 rupees) that Prime Minister Narendra Modi had banned on 8 Nov 2016, has come back to the central bank.
According to the bank, till June 30, 2017, notes of 500 and 1,000 rupees with the value of 15.28 trillion rupees came back. During the note-ban, 6.7 billion notes of 1,000 rupees were in circulation, out of which only 89 million notes came back. Since after the ban it was the Central government’s and central bank’s responsibility to release the figures as to how many notes were submitted to the bank. After 10 months of demonetization, it is the first time that the RBI has issued the figures.
In his address on the occasion of Independence Day, Prime Minister Modi had said that the administration has detected black money worth more than one lakh crore rupees and about three lakh crore rupees have returned to the banking system. In his address, Modi had said, in the last three years, more than Rs. 125,000 crore black money has been caught. The criminals were forced to hand over this money after demonetization and the operation to curb black money has so far been successful.
Modi said that in November, notes of 500 and 1,000 rupees had been declared invalid, thereby bringing black money back into the economy in large quantities. He added that research has shown that more than 3 lakh crores of rupees have been brought back to the economy after the ban and demonetization have increased the country’s income tax base. The Prime Minister during his speech had informed that by 5th August of this year, 56 lakh crore people have filed income tax returns, compared to 22 lakh last year. This time the number has more than doubled.
The data related to the ban issued by the Reserve Bank of India has once again stirred the Indian politics. According to the RBI data, the ban on the currency notes of 500 and 1000 was a flop show. No matter what the big claims were being made about it, nothing happened. Since the figures have come, the war between the government and the opposition is gaining pace. While the opposition is attacking the Modi-led NDA government and the government is defending itself completely and everyone is busy giving their arguments.
After the figures released by RBI, former Finance Minister P Chidambaram said that after the ban the banks got back rupees 16 thousand crores, but it spent Rs 21 thousand crores in printing the new currency, the government economists should get Nobel Prize.
RBI 'gained' Rs 16000 crore, but 'lost' Rs 21000 crore in printing new notes! The economists deserve Nobel Prize.
— P. Chidambaram (@PChidambaram_IN) August 30, 2017
While Congress Vice President Rahul Gandhi questioned that many people died due to the note ban and financial losses were also suffered, Will Prime Minister Narendra Modi takes the responsibility for all this?
A colossal failure which cost innocent lives and ruined the economy. Will the PM own up? #DemonetisationDisaster https://t.co/YXNdW8xBTL
— Rahul Gandhi (@RahulGandhi) August 30, 2017
Left leader Sitaram Yechury also attacking the government tweeted that 99 percent of the notes have come back to the banking system, but due to this, hundreds of people lost their lives. Many people lost their job, this anti-national work done by the country’s Modi government will never be forgotten and forgiven.
Lives & livelihoods lost, the Economy got a shock, workers lost their jobs. India can never forgive Modi govt for this anti-national act.
— Sitaram Yechury (@SitaramYechury) August 30, 2017
Finance Minister Arun Jaitley immediately held a press conference to defend the decision taken by the government over demonetization, after the figures were released by the RBI. He said that those who are calling the note ban a failure and criticising it are confused. They are not getting the real motive behind the whole practice of banning the currency he said. He further added that after the ban on notes of Rs 500 and Rs 1000, some people are commenting that the only purpose of the ban was that people would not deposit the black money and it would be seized. Those who have never fought a war against black money in life, they probably could not understand the purpose of this whole process.
Jaitley cleared that the purpose was not of seizing any money, the money deposited in the banking system does not mean that the whole money is valid. The Income Tax Department examines this money and its source. This is the reason why millions of people have been put on notice and one direct effect has been that the direct tax base has increased and it has also increased the effect of GST.
Arun Jaitley said that the ban was aimed to increase the tax base and it was also aimed at taking action against those who deposited the black money. Also, the ban was to separate the forged notes from the system and another major reason to exercise the note ban was to take a step forward towards making the Indian economy cashless.
He said that apart from all these aims, the note-ban also was a jolt to the separatists and they suffered heavy financial losses as money was seized and could not reach the terrorists also. In such a situation, when money comes into the system, it does not become legitimate money, he added. Arun Jaitley said that all the objectives regarding the entire process of demonetization by the government are on track.
Jaitley further said that the purpose of note ban was not to accumulate money in the banking systems but it was to detect the forged notes and remove it from the economy. Its purpose was also to increase the scope of tax filing and demonetization has also curbed terrorism and Naxalism to some extent he said. He ensured that the ban on currency was to reduce cash transactions and it also achieved success to some extent as cash exchanges have reduced by 17 percent. The effect of the ban on bondage is on the right track. The Finance Minister said that the next step of the government is to ban the use of black money in elections.
Jaitley said that those who have less understanding of dealing with black money are linking the cash held in banks with note ban. The purpose of demonetization was to reduce dependence on cash, digitalise the economy, increase tax scope, and deal with black money. Due to lack of cash after the note-ban, there has been a decline in terrorist and separatist activities in Chhattisgarh and Jammu and Kashmir.
According to the report issued by the RBI, for the financial year, 2016-17 currently total of 3285 million notes of 2000 are in circulation, worth the value of 6571 billion rupees and 5882 million notes of 500 are in circulation worth the value of 2941 billion rupees.