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Demonetisation: RBI says don’t know how much black money was removed

LiveMint logoLiveMint 04-09-2017 Jatin Takkar

New Delhi: The Reserve Bank of India (RBI) has told a parliamentary panel that it has “no information” on how much black money has been extinguished as a result of demonetisation of Rs 500 and Rs 1000 notes.

Stating that an estimated Rs 15.28 trillion in old Rs 500 and Rs 1000 notes has come back, “subject to future corrections based on verification process”, RBI also said that it has “no information” whether demonetisation is being planned to be implemented at regular intervals.

The central bank has been facing flak from the opposition parties for demonetisation and delay in disclosing figures on the scrapped notes, even as the government has maintained that the 8 November 2016 decision to ban Rs 500 and Rs 1000 notes in circulation at that time helped in curbing black money, among other benefits.

The central bank, in its annual report released last week, finally made public the details of the junked notes that have come back into the system putting the figure at Rs 15.28 trillion. The same figure has now been shared with the parliamentary standing committee on finance.

Replying to queries from the panel, RBI said the verification for authenticity and numerical accuracy are still on, while some of the specified banknotes (old Rs 500 and Rs 1000 notes) are still lying in currency chests. The central bank also informed the panel that the completion of the process of verification will take time in view of the large volume involved. The process is “going on in full swing” with most RBI offices working in double shifts and with the help of high-end verification machines, the central bank said.

“Till such time, these notes are processed by the RBI, their numerical accuracy and authenticity, only in estimation of SBNs received back is possible. Subject to future correction, based on verification process when completed, the estimated value of SBNs received as on June 30 is Rs 15.28 trillion,” the RBI said in its written reply to the panel.

To a query on how much amount of black money has been extinguished as a result of demonetisation, the central bank said, “The RBI has no information in this regard.” RBI gave similar reply to another question on how much unaccounted money has been legitimised through exchange of junked currency.

The central bank did not give any direct reply on adverse impact on the informal and unorganized sector, as also about the GDP loss. RBI said the deceleration in overall economic growth figures for 2016-17 had begun “much before demonetisation” due to weakness in industrial and services sector.

Last week, several members of the panel had sought redrafting of its draft report on demonetisation as RBI at that time had not provided some crucial details including on the quantum of junked Rs 500 and Rs 1000 notes. The acceptance of the report was deferred as member MPs across party lines including BJD MP Bhartruhari Mahtab, SP MP Naresh Agrawal and BJP MP Nishikant had said that the panel’s report on demonetisation needed to be “redrafted” while some of them stated that it “lacks punch”.

In its annual report for 2016-17, the RBI had disclosed that all but about 1% of the scrapped currency notes have come back into the system. The government had on 8 November 2016 banned old Rs 500 and Rs 1000 notes in an attempt to weed out black money in the country. The old notes were allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny. The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1000 notes has been made. Instead, a new Rs 2000 note was introduced post note ban. PTI

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