RBI ANNUAL REPORT - DEMONETISED CASH IS BACK - FAILURE OR SUCCESS - ?
BACKGROUND
Hope, everyone remember the Date 8-Nov-2016 - when Prime Minister Narendra Modi announced high-value currency notes of Rs 500 and Rs 1,000 would cease to be public tender.
In the biggest-ever demonetization exercise India had seen.
WHY THIS MOVE ?
WHAT HAPPENED NOW ?
Finally, three months short of the second anniversary of demonetization, the Reserve Bank of India (RBI) has completed the counting of banned Rs 500 and Rs 1,000 notes that returned to the banking system post the note-ban.
And the results are not too good considering the pain the economy went through post demonetization.
RBI released its Annual Report (of 268 Pages) for 2017-18 year.
https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/0ANREPORT201718077745EC9A874DB38C991F580ED14242.PDF
There are many things in this report related to Cryptocurrency, rising prices. But here, we will only discuss Demonetization here.
Does this mean, except 10,720 Crore - Rest all the Black money returned? Initially it was expecting Rs 3-4 lakh crore of black money to get extinguished outside the banking system post the demonetization exercise.
Critics say the numbers prove that demonetization was a big failure.
FEW POINTS WHICH RBI HAS HIGHLIGHTED IN ITS ANNUAL REPORT 2017-18
Is Less-Cash Economy & Digital World Now ? - NO - A BIG CONTRAST -
Post Demonetization, it was assumed we will move to digital world - digital transaction will get increases. But report says different figures - The value of banknotes in circulation increased by 37.7 per cent over the year to Rs 18.03 Lakh Crore at end-March 2018. The volume of Banknotes , however increased by 2.1 percent. i.e. Hard-Currency is more in circulation post demonetization.
This is in sharp contrast to the government push for digitization and less-cash economy.
IS BIG-VALUE CURRENCY DECREASE ? - NO - A BIG CONTRAST
During Demonetization, It was assumed - People will use low denomination notes and will not kept large denomination note - BUT Report says some different figures.
The share of Rs 500 and Rs 2000 banknotes , which together announced for 72.7 percent of the total value of banknotes in circulation in March end 2017 increased to 80.2% in March end 2018.
IS FAKE CURRENCY NOW NO MORE ? - NO - A BIG CONTRAST
One of the aims for demonetization was to fight the fake currency problem.
But, According to the RBI data, 522,783 pieces of counterfeit (fake) notes were detected in the banking system in 2017-18.
Share of fake notes was higher at 36.1 per cent in 2017-18 as compared to 4.3 per cent during previous year.
PRINTING NOTES WAS COSTLIER
The total expenditure incurred on security printing during the FY18 stood at Rs 4,912 crore as against Rs 7,956 crore in 2016-17.
If we even assume 0.7% i.e. 10,720 crore black money scrapped - but somewhat equal amount spent on printing the new notes.
For more information, you can access below links:
https://www.firstpost.com/business/rbi-annual-report-now-we-know-99-3-of-demonetised-cash-is-back-what-happened-to-all-that-black-money-5070481.html
https://www.business-standard.com/article/economy-policy/rbi-annual-report-99-of-demonetised-currency-back-into-the-system-117083000891_1.html
https://www.businesstoday.in/current/economy-politics/rbi-says-99pc-demonetised-notes-were-returned-10-major-points/story/281766.html
Above Information is as per data available in news till the date when I am posting this.
For Other Topics visit - http://learn2ogether.blogspot.com/
Hope, everyone remember the Date 8-Nov-2016 - when Prime Minister Narendra Modi announced high-value currency notes of Rs 500 and Rs 1,000 would cease to be public tender.
In the biggest-ever demonetization exercise India had seen.
WHY THIS MOVE ?
- To stem (remove) the circulation of black money and fake currency.
- To choke terror funding and corruption.
WHAT HAPPENED NOW ?
Finally, three months short of the second anniversary of demonetization, the Reserve Bank of India (RBI) has completed the counting of banned Rs 500 and Rs 1,000 notes that returned to the banking system post the note-ban.
And the results are not too good considering the pain the economy went through post demonetization.
RBI released its Annual Report (of 268 Pages) for 2017-18 year.
https://rbidocs.rbi.org.in/rdocs/AnnualReport/PDFs/0ANREPORT201718077745EC9A874DB38C991F580ED14242.PDF
There are many things in this report related to Cryptocurrency, rising prices. But here, we will only discuss Demonetization here.
- RBI has revealed that it has completed the counting of banned Rs 500 and Rs 1,000
- As per the report, 15.31 lakh crore out of the total Rs 15.41 lakh crore demonetized currency have returned to the banking system.
- The central bank said 99.3 per cent junked notes were deposited in banks, while 0.7 per cent notes worth Rs 10,720 crore couldn't be traced. (i.e. RBI don't know where this Rs 10,720 crore, May it's in Nepal/Bhutan bank and may be some amount is Black Money)
Does this mean, except 10,720 Crore - Rest all the Black money returned? Initially it was expecting Rs 3-4 lakh crore of black money to get extinguished outside the banking system post the demonetization exercise.
Critics say the numbers prove that demonetization was a big failure.
FEW POINTS WHICH RBI HAS HIGHLIGHTED IN ITS ANNUAL REPORT 2017-18
Is Less-Cash Economy & Digital World Now ? - NO - A BIG CONTRAST -
Post Demonetization, it was assumed we will move to digital world - digital transaction will get increases. But report says different figures - The value of banknotes in circulation increased by 37.7 per cent over the year to Rs 18.03 Lakh Crore at end-March 2018. The volume of Banknotes , however increased by 2.1 percent. i.e. Hard-Currency is more in circulation post demonetization.
This is in sharp contrast to the government push for digitization and less-cash economy.
IS BIG-VALUE CURRENCY DECREASE ? - NO - A BIG CONTRAST
During Demonetization, It was assumed - People will use low denomination notes and will not kept large denomination note - BUT Report says some different figures.
The share of Rs 500 and Rs 2000 banknotes , which together announced for 72.7 percent of the total value of banknotes in circulation in March end 2017 increased to 80.2% in March end 2018.
IS FAKE CURRENCY NOW NO MORE ? - NO - A BIG CONTRAST
One of the aims for demonetization was to fight the fake currency problem.
But, According to the RBI data, 522,783 pieces of counterfeit (fake) notes were detected in the banking system in 2017-18.
Share of fake notes was higher at 36.1 per cent in 2017-18 as compared to 4.3 per cent during previous year.
PRINTING NOTES WAS COSTLIER
The total expenditure incurred on security printing during the FY18 stood at Rs 4,912 crore as against Rs 7,956 crore in 2016-17.
If we even assume 0.7% i.e. 10,720 crore black money scrapped - but somewhat equal amount spent on printing the new notes.
For more information, you can access below links:
https://www.firstpost.com/business/rbi-annual-report-now-we-know-99-3-of-demonetised-cash-is-back-what-happened-to-all-that-black-money-5070481.html
https://www.business-standard.com/article/economy-policy/rbi-annual-report-99-of-demonetised-currency-back-into-the-system-117083000891_1.html
https://www.businesstoday.in/current/economy-politics/rbi-says-99pc-demonetised-notes-were-returned-10-major-points/story/281766.html
Above Information is as per data available in news till the date when I am posting this.
For Other Topics visit - http://learn2ogether.blogspot.com/
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