Virtually all the banned 500 and 1,000-rupee notes have been turned into banks, according to a report by Bloomberg, which means 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.
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% of the currency in circulation or 15.5 lakh crores. With the deadline for turning in notes having expired, unnamed sources told Bloomeberg that 15 lakh crores have been accounted for in deposits.
Neither the government nor the Reserve Bank of India or RBI have 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.
On the last day of demonetisation, the RBI had asked all banks to report details of deposits of old Rs. 500 and 1,000 notes after the close of banking hours.
The Finance Ministry said recently that it had asked for a recount to avoid double-counting.
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.