[It's still a mystery whose brainwave was this? But, for sure, neither of the RBI nor of the Chief Economic Adviser. (Ref.: the sub-section 'Whose Idea, This Time?' in 'Demonetisation: One Year After - A Synoptic View' at < http://www.documentcloud.org/documents/4311065-India-Demonetisation-One-Year-After-A-Synoptic.html >.)
<<According to the report, after verification and reconciliation, the total value of the Rs. 500 and Rs.1000 as on November 8, 2016, the day before note ban came into effect, was Rs.15,417.93 lakh crore. The total value of the such notes returned from circulation was Rs. 15,310.73 lakh crore. According to the RBI data, the value of banknotes in circulation increased by 37.7% over the year to Rs.18,037 lakh crore as at end-March 2018. ... Post demonetisation, the RBI spent Rs.7,965 crore in 2016-17 on printing new Rs.500 and Rs. 2,000 and other denomination notes, more than double the Rs.3,421 crore spent in the previous year. In 2017-18 (July 2017 to June 2018), it spent another Rs.4,912 crore on printing of currency, the report said. The demonetisation was hailed as a step that would curb black money, corruption and check counterfeit currency, but the RBI said, “Counterfeit notes detected in SBNs decreased by 59.7 and 59.6 per cent in the denominations of Rs.500 and Rs.1,000, respectively.” The RBI said, “Compared to the previous year, there was an increase of 35 per cent in counterfeit notes detected in the denomination of ₹100, while there was a noticeable increase of 154.3 per cent in counterfeit notes detected in the denomination of ₹50.” Counterfeit notes detected in the new Rs 500 and Rs 2,000 notes during 2017-18 were 9,892 and 17,929, against 199 and 638 respectively in the previous year, it added.>> (Excerpted from sl. no. III below.) So, almost all, 99.3%, of the demonetised currency notes came back to the RBI. Less than Rs. 11,000 crore got scrapped. To be kept in mind that the then Attorney General of India, Mukul Rohatgi, had informed the Supreme Court of India: "around Rs 4-5 trillion (4-5 lakh crore) would probably not find its way back into the system." (Ref.: 'Demonetisation: One Year After - A Synoptic View', the sub-section: 'The Other Two, of the First Three, Goals: How Have These Fared?'.) So, 11 thousand as against "4-5 lakh crore". And, about Rs. 5,000 crore additional amount was spent in printing to make up for the scrapped notes. Similarly, there's no cashless economy either. And, no reduction in counterfeit notes. The only claim that still persists is better tax compliance. The GST must have played a big role in that. One the flip side, the disruptions were enormous. More than 100 people reportedly died standing in the queues. An estimated 1.5 million jobs were lost in first four months of 2017. Disastrous effects on the MSMEs, the unorganised sector, in particular. Significant dip in GDP. (Ref.: 'Demonetisation: One Year After - A Synoptic View', the subsection: 'The Negative Outcomes Following Demonetisation'.) The two edits reproduced below compellingly underline the disastrous nature of the (utterly rash and stupid) measure. Presumably, in the hunt for political dividends.] I/III. https://blogs.timesofindia.indiatimes.com/toi-editorials/demon-demon-the-most-ill-considered-economic-move-by-the-modi-government-has-been-demonetisation/ DeMon demon: The most ill-considered economic move by the Modi government has been demonetisation August 31, 2018, 2:00 AM IST TOI Edit in TOI Editorials | Edit Page, India | TOI Following the release this Wednesday of Reserve Bank of India’s annual report of 2017-18, it is clear the government is clutching at straws by claiming that the objectives of the November 2016 demonetisation exercise have been realised. Almost 99.3% of demonetised currency was returned by its holders, belying claims of windfall gains for the taxman. From an economic standpoint, it is the most ill-advised move of the Narendra Modi government. An economy gaining in momentum recorded a slowdown for two consecutive years, at a time when about 120 countries witnessed a pickup in growth rates. This represents an enormous loss to the economy. For the central bank, the move complicated monetary management. For farmers and the informal sector, traditionally the most cash dependent, it piled on long drawn out misery. The stated aims of demonetisation were to combat black money and “rising incidence of fake currency notes.” Five weeks after demonetisation began, finance minister Arun Jaitley told Lok Sabha that government had no estimate of black money in the economy either before or after demonetisation. In the absence of a reference point, demonetisation’s impact on black money is purely in the realm of faith. Given that most currency was returned, it may have helped launder black money overall. For sure, an overnight ban on high value currency notes would have rendered fake notes harmless. But fake currency is a menace which requires constant vigil. As RBI’s annual report shows, new currency notes are also being forged. A collateral benefit was expected to be lower incidence of cash in the economy and a growth in digital transactions. One measure shows currency to GDP ratio was 10.9% in 2017-18, lower than the pre-demonetisation level. But even this level of currency usage is among the highest in the context of India’s emerging market peers. Moreover, there has been a surge in use of currency as a medium of financial saving. Cash hoarding by households is a fallout of demonetisation. Digital payments, after an initial surge in the absence of adequate currency notes, went back to trend level. The key takeaway is that there is no substitute for relentless reforms which transform the economy by improving incentives. Grand gestures, high only on symbolism, hurt the economy while causing needless suffering. Black money can be curbed by adopting more transparent systems, as well as a taxation policy that lowers rates while avoiding special exemptions. This piece appeared as an editorial opinion in the print edition of The Times of India. II/III. https://indianexpress.com/article/opinion/editorials/demonetisation-banned-notes-rbi-indian-economy-5333336/ Avoidable pain It’s official: Demonetisation did not deal body blow to black money; hurt farmers, daily wagers, informal enterprises. By: Editorial | Updated: August 31, 2018 9:12:31 am The comparison of growth rates during different political regimes was never a consideration for the committee. The Narendra Modi government’s tenure so far has seen five major economic interventions: Goods and Services Tax (GST), Insolvency and Bankruptcy Code, Monetary Policy Framework Agreement committing the Reserve Bank of India (RBI) to inflation targeting, decontrol of petrol and diesel prices along with limiting LPG subsidy to the really needy, and, of course, demonetisation. Of these five “reforms”, the report card on the last one is now unambiguous. Demonetisation hasn’t achieved its publicly-stated objectives. According to the RBI’s latest annual report, out of the Rs 15.42-lakh crore worth of outstanding Rs 500 and Rs 1,000 denomination currency notes that were invalidated overnight on November 8, 2016, as much as Rs 15.31 lakh crore has come back to the banking system. The expectation that those who had hoarded their ill-gotten wealth in cash would fear depositing or exchanging these at banks — thereby bringing a “windfall” of Rs 4-5 lakh crore to the Centre, through a reduction in the RBI’s liabilities by that amount — has simply not materialised. Far from dealing a body blow to black money, demonetisation inflicted avoidable pain on farmers, daily wage labourers and informal enterprises used to transacting in cash. Nor has demonetisation managed to significantly bring down the circulation of high-denomination notes, seen as conducive to the generation of unaccounted income. The RBI report shows that the now-scrapped Rs 500 and Rs 1,000 notes accounted for 86.38 per cent of the Rs 16.42-lakh crore total value of banknotes in circulation as at end-March 2016. Two years later, the outstanding value of the currency in circulation stood at Rs 18.04-lakh crore, in which the share of the new Rs 500 and Rs 2,000 notes was 80.17 per cent. If cash transactions are still happening mostly in high-denomination notes, it either points to unabated black money generation or, more likely, the sheer utility of these in an economy where digital payments’ penetration is low. It is plausible that demonetisation has created an environment where doing business in cash is less acceptable. But that goal has been accomplished better through GST, which incentivises firms to pay tax on their output. Without that, they cannot claim credit for taxes paid on inputs. In hindsight, GST, insolvency, inflation targeting and fuel price deregulation were well-through-out reforms. Mistakes were made in GST implementation, but these have been rectified and that process is still on. The same goes for bankruptcy resolution. Demonetisation, unfortunately, was a decision of questionable economic rationale. And poor planning led to the most unintended consequences. III. https://www.thehindu.com/business/Economy/993-of-demonetised-currency-returned-to-banks-rbi/article24808160.ece 99.3% of demonetised currency returned: RBI Special Correspondent NEW DELHI, AUGUST 29, 2018 12:27 IST UPDATED: AUGUST 29, 2018 15:17 IST 99.3% of demonetised currency returned: RBI *Post demonetisation, the RBI spent ₹7,965 crore in 2016-17 on printing new ₹500 and ₹2,000 and other denomination notes.* Over 99% of the ₹ 500 and ₹ 1000 that were withdrawn from circulation in November 2016 were returned, the Reserve Bank of India (RBI) said in its annual report, released on Wednesday. According to the report, after verification and reconciliation, the total value of the ₹ 500 and ₹,1000 as on November 8, 2016, the day before note ban came into effect, was R₹15,417.93 lakh crore. The total value of the such notes returned from circulation was ₹15,310.73 lakh crore. According to the RBI data, the value of banknotes in circulation increased by 37.7% over the year to ₹18,037 lakh crore as at end-March 2018. With more ₹500 notes pumped into the system over the last one year, the share of ₹2,000 notes by value declined to 37.3% as on March 2018 as compared to 50.2% a year ago. The share of ₹ 500 note, in terms of value, increased from 22.5% to 42.9% during the same period. “The share of newly introduced ₹200 banknotes in the total value of banknotes in circulation was 2.1% as at end-March 2018,” the report said. PTI adds: Nearly ₹8,000 cr spent by RBI post-DeMo Post demonetisation, the RBI spent ₹7,965 crore in 2016-17 on printing new ₹500 and ₹2,000 and other denomination notes, more than double the ₹3,421 crore spent in the previous year. In 2017-18 (July 2017 to June 2018), it spent another ₹4,912 crore on printing of currency, the report said. The demonetisation was hailed as a step that would curb black money, corruption and check counterfeit currency, but the RBI said, “Counterfeit notes detected in SBNs decreased by 59.7 and 59.6 per cent in the denominations of ₹500 and ₹1,000, respectively.” The RBI said, “Compared to the previous year, there was an increase of 35 per cent in counterfeit notes detected in the denomination of ₹100, while there was a noticeable increase of 154.3 per cent in counterfeit notes detected in the denomination of ₹50.” Counterfeit notes detected in the new Rs 500 and Rs 2,000 notes during 2017-18 were 9,892 and 17,929, against 199 and 638 respectively in the previous year, it added. -- Peace Is Doable -- You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send an email to [email protected]. 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