New Delhi: Former chief statistician of India, Pronab Sen didn’t express any surprise at the news about 99.3 per cent demonetized currency returning in the banking system and said that it was “expected”. Sen also called demonetisation a “failure”, News18 reported. Also Read - COVID-19 Hangs Over The Future Like a Spectre: RBI Monetary Policy Report
“Whether demonetisation has failed or not depends on its objective. It was pegged on hordes of notes that were stashed and that it will never come back. It was said that this amount would be over Rs 3 lakh crore. If that was the objective then yes, it has failed because Rs 13,000 crore is the amount, which is possibly held outside the country in nations such as Nepal, Bhutan, Bangladesh, Burma who simply did not have the facility to exchange the currency,” the news channel reported Sen as saying. Also Read - What is RBI's 3-Month Moratorium? Will EMI be Deducted From Your Account? Here Are Your Answers
Sen also mentioned the use of black money, he said that trade and money lending are the commonest ones. “The entire trade sector functions on cash, a sizeable portion of which is black money. Now, both of these are economically valuable activities. There is no doubt that the black money used to finance these two activities has reduced but to the extent that the Centre expected,” Sen told News18. Also Read - How RBI Set up War Room in Just One Day Amid Coronavirus Outbreak
It must be noted that the Reserve Bank of India (RBI) today said in its 2017-18 annual report that 99.3 per cent of banned notes were returned in the banking system after demonetisation. The report also states that the total value of money returned was Rs 15.3 lakh crore against Rs 15.4 lakh crore that was in circulation on Nov 8, 2016. The statistics suggest that the demonetisation exercise failed to check black money, which was claimed to be one of the main aims of banning specified notes.
The report states, “SBNs (specified banknotes) were received by the Reserve Bank either directly or from bank branches/ post offices through the currency chest mechanism. Verification and process of the SBNs has been completed. The total value of SBNs in circulation as on November 08, 2016, post verification and reconciliation, was Rs 15,417.93 billion. The total value of SBNs returned from circulation is Rs 15,310.73 billion.”
RBI also stated in the report that the credit growth has revived fuelling growth prospects in the country. According to the report,” In the evolution of monetary aggregates, currency in circulation surpassed its pre-demonetisation level while credit growth revived to double digits from a historic low in the previous year.”