An annual report of the RBI has conclusively proved that demonetisation has failed to check black money as claimed by Prime Minister Narendra Modi.
On 8 November 2016, while declaring Rs 500 and Rs 1,000 notes illegal, Modi had said that the key objective behind the note ban was to curb black money.
However, the latest report by the Reserve Bank of India has said that nearly all the demonetised money in circulation before 8 November, 2016, had returned to the banks. It said that prior to the note ban announcement, Rs 15,417.93 worth currency was in circulation. After the demonetisation move Rs 15,310.73 had returned to banks -almost all of it.
The RBI’s latest report will cause further embarrassment for Modi and his party as the prime minister and his cabinet have often struggled to explain the reason why he suddenly decided to declare nearly 90% currency in circulation illegal. This led to leaving a crippling effect on the Indian economy as the small and medium businesses that heavily relied on cash transactions bled.
The announcement comes a day after former finance minister, P Chidambaram, launched a tirade against the Modi government stating that the note ban was not praised by a single economist across the world.
While addressing a National Students’ Union of India (NSUI) event in Delhi, Chidambaram said, “Show me one economist anywhere in the world who stood up and said demonetisation was a good thing. Not one. On the day PM announced demonetisation, Chief Economic Advisor Arvind Subramanian was in Kerala. He was not in Delhi. He was not even consulted. He didn’t know that demonetisation is taking place. If CEA doesn’t know, what kind of an economy is this?”