10 months since demonetisation was announced, Indian economy has retained 99% of the Rs 15.44 trillion which was withdrawn with discontinuation of Rs 500 and Rs 1000 notes in November 2016. The data shows that almost all money is back, so where is the black money?
When PM Modi announced on 8 November, 2016 that Rs 500 and Rs 1000 notes will no longer be legal and are discontinued as legal tenure for economic exchange, the country was jolted with shock. It proved to be a temporary yet major blow to India’s economy and market, disrupting daily routine of 1.4 billion citizens, but the step was taken to curb black money, fake currency and terror funding – all in one single shot. Indian citizens gladly embraced the difficulties faced because 86% of the country’s total currency was discontinued within just a day – causing immense issues; it was accepted because benefits of demonetisation seemed to have outweighed its temporary issues.
Do some math, shall we? Today, after almost 10 months since demonetisation, the estimated value of SBNs (Specified Bank Notes) on 30th June 2017 is Rs 15.28 trillion. A total of 86% of currency was demonetised which means Rs 15.44 trillion was removed in from of old Rs 1000 and Rs 500 notes. Which means 99% of the demonetised currency has already found its way back into circulation – leaving only Rs 16,050 Crore or 1% money that was ‘curbed’ back. Out of which Rs 8,900 crores was said to be in the denomination of Rs 1,000.
Not forgetting the expenses of printing new notes with all security features which sums up to Rs 7,965 crore for the period July 2016-June 2017 – the remonetisation cost. So with all the additions and subtractions, the net gain received by RBI from the mammoth demonetisation exercise boils down to just Rs 11,505 crores. It is nothing compared to what was taken down from the country for economically horrendous 10 months. The RBI has been gifted with nothing but losses due to demonetisation and from figures, no big black money in cash seems to have perished – except initially.
Nobody can deny the fact that demonetisation crunched the cash, hit the common man the hardest, gave small to medium businesses a very hard time, economic growth was hit significantly – and finally the RBI is left with almost no black money gains. The real question here is, was it all worth it?