Shame on RBI Which ‘Recommended’ Demonetisation – Chidambaram
Former finance minister P Chidambaram censured the Reserve Bank for ‘recommending’ the demonetisation move that resulted in 98.6% of the withdrawn currency coming back into the system.
“Rs 16000 cr out of demonetised notes of Rs 1544,000 cr did not come back to RBI. That is 1%. Shame on RBI which ‘recommended’ demonetisation,” Chidambaram said in a tweet.
The RBI, nine months after the Centre announced the move to withdraw old Rs 500 and Rs 1000 currency notes in a bid to cut down on black money, said in its annual report that Rs 15.28 lakh crore out of the Rs 15.44 lakh crore withdrawn currency have come back into the banking system. Only 8.9 crore pieces of Rs 1000 notes out of 632.6 crore pieces have not been returned post the note ban, the central bank said.
The annual report of the central bank further said that the cost of printing of currency notes more than doubled to Rs 7,965 crore in 2016-17 from Rs 3,421 crore in the previous year on account of new currency printing.
The demonetisation move was announced by the government to flush out black money, slash at the roots of counterfeit currency and end terrorist funding in the country. Till December 31, 2016, people were allowed to deposit old Rs 500 and Rs 1000 notes in banks with unusual deposits coming under the scrutiny of Income Tax authorities. Since November 8 last year, the RBI has printed new Rs 500 notes, Rs 200 notes and Rs 2000 currency to compensate for the vacuum of currency in the market. However, new Rs 1000 notes have not been printed so far.
“RBI ‘gained’ Rs 16000 crore, but ‘lost’ Rs 21000 crore in printing new notes! The economists deserve Nobel Prize,” Chidambaram wrote. He also asked whether the move to demonetise 86 per cent of the currency in circulation was ‘a scheme designed to convert black money into white?’
Chidambaram, a senior leader of the Congress party, had said in the past that demonetisation was the ‘biggest scam’ of 2016 and that it dealt a serious blow to the economy.