Govt says ₹6L crore black money wiped out, Oppn questions claim

NEWDELHI: The NDA government has argued that demonetisation effectively wiped out black money worth ₹6 lakh crore from the Indian economy, even as an angry Opposition dubbed the move a failure that crippled jobs and small industries.

A finance ministry background note to a parliamentary panel stated that based on Reserve Bank of India (RBI) reports, there was a reduction of around 50% in high-value notes that would have been in circulation if demonetisation had not happened. But the Opposition argued that as nearly all the cash had returned to the system, efforts to curb black money had not yielded the desired results.

Parliament’s standing committee on finance, however, decided to expand the scope of its review of demonetisation and black money and will now seek inputs from states and various ministries to study the “full impact of demonetisation”. “A draft report that was under preparation from August has now been shelved,” said a member of the finance panel.

The ministry note said as on November 8, the specified bank notes (high-value) were of the value of ₹15.44 crore. Given the growth rate of the notes in previous years, they would have amounted to ₹18 lakh crore in November 2017. “Reserve Bank of India has reported that the specified bank notes of estimated value of ₹15.28 lakh crore were deposited back by June 2017. The estimated high-value notes at September-end are approximately ₹12 lakh crore — a decrease of 50% of the high value notes that would have been in circulation today without demonetisation,” the note said.

It also pointed out that new high-value notes of ₹500 and ₹1,000 were of the order of ₹2.94 lakh crores and ₹6.57 lakh crore respectively on March 31, 2017.

Several Opposition members continued to question economic affairs secretary Subhash Garg and financial services secretary Rajiv Kumar on the merits of demonetisation on Thursday.

Some asked the officials on the cost incurred by the government to scrap the two high-value notes and then bring in the new ₹2,000 notes. A member wanted to know about the cost of demonetisation and why the banks, sitting on piles of money after the huge cash inflow during demonetisation, were not giving enough credit. Members said the officials sought time for a written reply.