The high denomination Rs 2,000 and Rs 500 notes continue to account for more than 72% of the currency in circulation, according to the Reserve Bank of India’s annual report released on Wednesday.
This contradicts one of the stated aims of the demonetisation drive launched on November 8, 2016, when Rs 500 and Rs 1,000 bills were scrapped. At almost 86%, these high-value notes made up for a huge chunk of the existing currency in the system by value, but not much seems to have changed.
The RBI’s annual report said there were 588.20 crore pieces of Rs 500 notes, tallying up to Rs 2.94 lakh crore in value, till March 2017. At the same time, there were 8.9 crore Rs 1,000 notes in circulation with a total value of Rs 8,900 crore.
In addition to these, there were 3,285 pieces of the newly introduced Rs 2,000 notes in circulation, valued at Rs 6.57 lakh crore.
This implies that high-denomination currency in the economy till March 2017 amounted to Rs 9.60 lakh crore, as compared to that in the preceding year, when the figure stood at Rs 14.18 lakh crore, according to RBI data.
Earlier, the high-denomination notes of Rs 500 and Rs 1,000 that were demonetised constituted 86% of the cash in circulation. But the current figure after the new Rs 2,000 and Rs 500 bills were introduced is not much lower, at 72% of the total cash in the system.
It needs to be noted that more than half of all the currency in circulation by value is now composed of Rs 2,000 notes, while a quarter of total comprises Rs 500 notes, even as the RBI is readying itself to launch new Rs 200 notes.
Finance Minister Arun Jaitley on Wednesday said that the volume of cash in circulation had dropped by 17%, as per the RBI report. “The objective of the demonetisation drive was not confiscation of money,” Jaitley said at a press conference. “The objective was to bring down the cash in the economy, bring in digitisation, expand the tax base and fight black money.”
He also hit back at the Congress, which had criticised the note ban. “People with inadequate understanding of how to tackle black money linked the note ban with money returned to the system,” he said.