‘Demonetisation has limitations’

FINANCE MINISTER Arun Jaitley onfridaysaidnewcurrencynotes worth over Rs 12 lakh crore are currently in circulation in the country. The last data the Reserve Bank of India has released was on February 24, and till then currency in circulation was about Rs 11,64,100 crore, he said.

“So, this is the quantum of currency which they, as on February 24, made available in the market. A fortnight has almost elapsed since then. This amount itself would have now increased to beyond Rs 12 lakh crore,” he said in Lok Sabha during Question Hour. He said as far as the remonetisation exercise is concerned, the RBI has been injecting new currency notes of Rs 500 and Rs 2,000 denominations systematically into the market since November 8.

Responding to supplementary questions, the minister said it was difficult to give an exact figure on the number of defunct Rs 500 and Rs 1,000 notes deposited so far. The government had withdrawn from circulation old notes worth Rs 15.44 lakh crore of Rs 500 and Rs 1000.

“Every currency note has to be verified — whether it is genuine or fake. Then the genuine and fake notes have to be segregated. It is a very large exercise. It is difficult to tell (the figure) now. Once the RBI completes the exercise, we will inform the House in details,” he said. To a query on the cost of printing new notes, the government said that it varies from Rs 2.87 to Rs 3.09 per Rs 500 note (old or new) and from Rs 3.54 to Rs. 3.77 per piece for a Rs 2,000 note.

“The cost price of the currency note is a function of direct and indirect material, labour and other overhead costs, which change every year. Differences also arise due to the type and age of the machines and the skill level of the employees ... Due to the differences mentioned above, the cost of notes varies from Rs 2.87 to Rs 3.09 per Rs 500 note (old or new) and from Rs 3.54 to Rs 3.77 per piece for a Rs 1,000 note. The cost of the Rs 2,000 note is in the same range as that of the old Rs 1,000 note,” the minister said.

To another query on what action is being taken against economic offenders fleeing the country, Jaitley said the government is working to have agreements with the maximum number of countries in this regard. The extradition takes a lot of time, but some nations help in sending back such people fast by deporting them, he said.

To ensure that such people “cannot hide” in other countries, the government is working on having agreements with maximum number of nations, he said. When asked by Saugata Roy (TMC) as to what steps the government has taken to bring back “IPL man” and “Kingfisher man” back, Jaitley said Rs 840 crore worth of assets has already been attached by various enforcement agencies.

The finance ministry was examining whether a new law would be required or prevailing statutes will have to be amended to confiscate the properties of those who commit financial crimes in India and hide abroad. Ahmedabad: Former RBI Governor C Rangarajan on Friday said that measures taken to curb black money like the demonetisation drive attacks only unaccounted income in cash form and that other steps like changes in tax administration, GST and a relook at financing of political parties should be undertaken. After his lecture on ‘Journey of India’s Reforms’ at IIM Ahmedabad, Rangarajan said, “Demonestisation attacks only the existing stock of unaccounted income, that too held only in the form of cash- therefore it has limitations. It does not address the issue of how to prevent further accumulation of unaccounted income...”. ENS