Moneycontrol
May 10, 2017 07:23 PM IST | Source: Moneycontrol.com

Six months since demonetisation: Six questions RBI has refused to answer

Though the economy has managed to crawl back close to pre-demonetisation levels, there are still some questions that are yet to be answered.

Six months since demonetisation: Six questions RBI has refused to answer

Moneycontrol News

It has been six months since Prime Minister Narendra Modi announced the historic decision to ban Rs 500 and Rs 1,000 notes in India.

Though the economy has managed to crawl back close to pre-demonetisation levels, there are still some questions that are yet to be answered.

Responding to an RTI query that sought minutes of the meeting in which the RBI decided to give the go-ahead to the decision, the central bank said that such information, if disclosed, would be "detrimental to the nation’s economic interests".

“Disclosing such details may impede future economic or fiscal policies of government of India”, it said.

However, here are six questions that still need answering.

1: How much old currency was returned to the system in the form of deposits or exchange?

Both the government have steadfastly refused to answer this question, even as source-based media reports have pegged the figure close to the total quantum of money that was demonetised -- roughly Rs 15.44 lakh crore.

2: How much black money was uncovered due to the note-ban exercise?

While this question may be difficult to answer, as it may be difficult to quantify the benefits of the exercise with respect to black money, eliminating it was one of the stated goals of demonetisation.

3: What is the amount of counterfeit notes that came into the government's possession?

Another goal of demonetisation was to tackle the fake currency menace. The new Rs 500 and Rs 2000 notes issued after the note ban were said to have superior security features. But it is not clear if and how much of the old stock that was extinguished was fake.

4: What is the status of remonetisation of the Rs 15.44 lakh crore old notes that were made invalid during demonetisation?

Both the government and RBI have commented on the remonetisation exercise, saying that most of the quantum of money that was demonetised has been brought back into the system, but an exact figure is not available.

5: How did the RBI weigh the pros and cons of the note-ban move despite obvious disruptions to economic activity?

The RTI query sought minutes of the meeting that debated the demonetisation discussion but publicly, the central bank has even refrained from outlining a nuanced case that would provide a peek into the rationale that drove the decision.

6: How prepared was RBI for the following digital-money push by government post note-ban?

In the immediate wake of the decision, there were various reports criticising the preparedness of the government and central bank to tackle the fallout of the cash ban, but publicly the RBI has not outlined steps that it took to prepare for such a large-scale extinguishing of currency notes.
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