On November 8th 2016, Government of India announced the demonetization of 500 and 1000 notes in India. Old 500 notes were exchanged with new 500 notes but 1000 notes were replaced with 2000 notes.
According to annual report released by RBI on Wednesday, 98.96% of 500 and 1000 notes that had been invalidated had returned.
This announcement has put an end to one of the big mysteries surrounding the exercise, demonetization is considered as big step taken to eradicate black money and according to some analysts this has helped Bhartiya Janata Party in gaining support and also wining Crucial Uttar Pradesh Polls earlier this year.
The Central Bank said, “subject to future corrections based on verification process when completed, the value of banned notes in circulation as of November 8th was 15.44 trillion according to the data given by finance minister. The estimated value of banned notes RBI received is 15.28 trillion”.
After prime ministers announcement of invalidation of high value currency, estimates suggested that around 3 trillion would not be returned as it is unaccounted or black money. Defending demonetization in supreme court, the attorney general Mukul Rohatgi said around 4-5 trillion may not find its way back.
By December, it was comprehensive that tax evaders managed to legalize their black money using mules and proxies to deposits and many other ways.
With RBI data showing about most of the money returning to the system, the opposition criticized the government saying that RBI’s report was proof that demonetization has “Utterly Failed”.
“The trail of deposits” of bank notes into bank accounts may provide valuable information to the revenue authorities in tracing unaccountable money, RBI report said.
RBI has detected around 7,62,072 fake notes compared to 6,32,926 pieces last year. However, the total value of these fake notes is considered to be 43 Crs.
The Ministery’s note has added that demonetization resulted in a 24.5% increase in IT Returns filed till Aug 5th, this RBI report put a light on other aspects of demonetization such as its costs. The net profit of Rs 30,663 Crs from 65,880 crs due to increase in income and increase in expenditure.Entire profit was transferred to the government by central bank.
The central bank has recently launched its new 200 and 50 rupees notes also.