Did demonetisation really address fake notes problem?
New Delhi, Aug 30: With the Reserve Bank of India (RBI)'s annual report stating that 99.3 percent of the banned currency notes returned post demonetisation, the questions are now being asked if the note ban yielded desired results.
There were three main objectives behind the banning of Rs 500 and Rs 1,000 notes in november 2016 - curbing black money hoarding, tackling the menace of fake currency and dealing a blow to terror financing. Apart from these, the government also wanted to give push to digital transactions and bring more people into the tax net.
The total value of Rs 500 and Rs 1,000 notes, which were banned on November 8, 2016, was Rs 15,417.93 billion, out of which Rs 15,310.73 billion was returned. This means that around 99.30% of the banned notes were returned. The value of currency that did not return is far less than what the goverment expected.
Coming the the fake notes problem, the report said overall detection of counterfeit notes was 522,783 pieces in 2017-18 as compared to 762,072 pieces in 2016-17 which is 31.4 per cent lower. But, the number of fake notes of Rs 2,000 jumped to 17,929 in fiscal 2017-18 as compared to 638 pieces in 2016-17. Similarly, 9,892 pieces of counterfeit notes were detected in the new Rs 500 banknotes in 2017-18 as compared to 199 in the previous fiscal.
So the overall fake notes in terms of number of counterfeit notes has come down, but the counterfeiting of new Rs 500 and Rs 2,000 notes, that boast of improved security features, has gone up.
The Department of Economic Affairs secretary Subhash Chandra Garg on Wednesday said "demonetisation met its intended objective", adding that there is no cash crunch anywhere in the country.
''All the notes which have been received have been counted, they have been disposed of and the final count which has come up is that about 10,000 odd crore of the notes have not come back the rest have all come back,'' Garg said.
The Reserve Bank of India (RBI) in its annual report for the year 2017-18 said that the Indian economy exhibited resilience during fiscal 2017-18, adding that the "domestic financial markets were broadly stable" during this period. The report also said that the currency circulation in the economy has surpassed its pre-demonetisation level.