Demonetisation has achieved its objectives: Official

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New Delhi, Aug 29 (IANS) Notwithstanding the fact that only over Rs.10,000 crore of demonetised money did not come back to the RBI, government on Wednesday claimed that it has achieved the targets it had set in its decision, including checking black money, counterfeit currency and terror funding while encouraging digital transactions.

Economic Affairs Secretary Subhash Chandra Garg said the demonetisation process was now complete.

His comments came after the RBI in its annual report said that 99.3 per cent of the Rs 15.3 lakh crore taken out of circulation in November 2016 has returned to the central bank. In the immediate aftermath of the demonetisation measure effected in November, 2016 the government had claimed that a sum of Rs. three lakh crore to Rs. four lakh crore would not come back to the banks, implying that it would correspond to the unaccounted money in the system.

Without elaborating further, Garg said that the government has achieved the targets it had set for the demonetisation drive, including checking black money, conterfeit currency and terror funding and encouraging digital transactions.

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He referred to the annual report of the RBI last year which said at that time that most of the notes were counted but the process was not complete.

“Around Rs 16,000 crore of demonetised notes were not received. The rest were. Now they have completed the whole process. All the notes which have been received have been counted. They have been disposed of and the final account that has come up is about Rs. 10 thousand odd crore of the notes have not come back.

“There are some small notes which are stuck in the whole process, which can come back. Some amount with the law enforcement agency. It is a small number. The process of demonetisation is now complete,” he said.

Garg said there were benefits in the process with major advantage being induction of newer notes with more security features, “virtually weeding out all the fake currency”.

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“We have not in the last one year and 10 months had a single high quality fake note in the system. This is the result of the new currency. The physical currency was growing at a certain rate. It is a natural process as the GDP grows, payment system grows, currency grows. After demonetization if it had grown at that rate, the currency, which is in the system today, is 87-88 per cent of that … so the Rs 3 lakh to Rs 4 lakh crore less currency is in the system today than it would have been had the old system been in place,” he said in an apparent reference to the Rs. three lakh to Rs. four lakh that was claimed would be extinct.

The RBI’s annual report 2017-18 said that on completion of the process of verification of the scrapped Rs 500 and Rs 1,000 notes, it is found that the total value of the demonetised currency returned to the banks now stands at Rs 15.3 lakh crore, which amounts to 99.3 per cent of the Rs 15.4 lakh crore worth of such notes in circulation on November 8, 2016.

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Asked about reports of fake notes presented to the banks post-demonetisation, Garg said last year in a RBI report it was said, that all the notes were verified and the amount of fake notes was “minuscule and ignorable”.

In reply to whether an MoU has been signed with Nepal and Bangladesh on the fate of the demonetised currencies lying in those countries, he said “there are some notes in Nepal in the central bank and in Bangladesh it is even lower. No MOUs has been signed and we most probably won’t accept any notes from them.”

The official said there was no cash crunch in the country now. It was a temporary problem in the month of February-March.

–IANS

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