RBI tells parliamentary panel it has no data on black money recovered since demonetisation
The central bank also does not know whether there will be such note ban drives at regular intervals in the future.
The Reserve Bank of India has no information on the black money that was eliminated after the government’s demonetisation drive in November 2016, or about the unaccounted for cash that was legitimised through exchange of the scrapped currency, the central bank told a parliamentary panel. The RBI also does not know whether there will be such drives at regular intervals in the future, PTI reported on Monday.
On November 8, 2016, the government had declared Rs 500 and Rs 1,000 notes illegal tender in, what it had claimed then, was an effort to eradicate black money. However, a report released by the RBI on August 30 confirmed that demonetisation has been an economic failure, with very few benefits at a steep cost.
The annual report said that Rs 15.28 lakh crore, or more than 99% of the value of currency that was scrapped, had returned to the banking system on June 30. These figures were, however, only an estimate and might be corrected later as the Rs 500 and Rs 1,000 notes deposited after demonetisation have yet to be processed for “numerical authenticity”, it had said.
The Reserve Bank of India told the parliamentary panel, in a written reply, that this process of verification was still on, and will take a long time as a large volume of notes was involved.
It did not give a direct reply on demonetisation’s adverse impact on the unorganised sector or the slump in the Gross Domestic Product. India’s Gross Domestic Product growth slowed to 5.7% in the first quarter of 2017 from 7.9% in the corresponding period last year. A number of sectors, including manufacturing, electricity and construction, saw a decline in growth, which pulled the overall figure down in the April-June quarter.
The RBI said the slowing down in overall economic growth had “begun much before demonetisation” due to weakness in industrial and services sectors.
After the Rs 500 and Rs 1,000 bills were taken out of circulation, the RBI issued Rs 2,000 notes and a new series of Rs 500 notes. These two high-denomination notes now make up more than 70% of all currency in circulation by value, according to RBI data. Recently, it also released new Rs 50 notes.