Rs 12 Lakh Cr Already in Bank, Says AG. Black Money Math Gone Wrong?
Attorney General Mukul Rohatgi has told the Supreme Court that around Rs 12 lakh crore in scrapped currency has been deposited in the banking system, which exceeds the government’s estimates for cash to be returned.
A Congress worker holds scrapped Rs 500 and Rs 1,000 notes during a protest against demonetisation in Hyderabad on November 28, 2016. (AP Photo)
New Delhi: Attorney General Mukul Rohatgi has told the Supreme Court that around Rs 12 lakh crore in scrapped currency has been deposited in the banking system, which exceeds the government’s estimates for cash to be returned.
The Attorney General said the government had expected Rs 10 or 11 lakh crore to be returned out of a total of Rs 15 lakh crore of Rs 500 and Rs 1,000 notes that were demonetised. Chief Justice of India TS Thakur commented that it meant that the collection had gone beyond the government’s expectations.
What this means is that the government’s calculations on the amount of black money in the economy may have gone awry. The calculation may have been that a certain amount of money — estimates vary from Rs 2 to 4 lakh crore — may not be returned because it was black cash, and this would represent the liabilities on the RBI’s balance sheet that would get extinguished.
“The government’s assessment of the amount of black money in cash may be questionable,” NR Bhanumurthy, an economist with the National Institute of Public Finance and Policy, said. “People may have found new ways to bring black currency back into the banking system by various methods, including laundering,” he added.
P Chidambaram, who was the counsel for one of the petitioners, told the Supreme Court that only around Rs 4 lakh crore worth of new currency has been printed so far, a month after demonetization, while the total value of extinguished banknotes was worth around Rs 15 lakh crore.
The Supreme Court is hearing petitions and public interest litigations challenging demonetisation.
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