New Delhi: The Reserve Bank of India has added to the confusion swirling around the demonetisation numbers with its reply to Mumbai-based RTI activist Anil Galgali.
Anil Galgali asked the RBI a series of questions under the Right to Information Act. Among them was a query about the inventory of new 2000 and 500 rupee notes with the RBI on 8 November, 2016, the day Demonetisation was announced.
The RBI’s answer is that it had Rs 4.94 lakh crore worth of 2000 rupee notes as on that date and none of 500 rupee notes. This is where it gets interesting.
RBI deputy governor R. Gandhi on December 13 said that “The banks have since the start of the programme on November 10, 2016 till December 10, 2016 issued notes valued at Rs 4.61 lakh crore to the public over their counters and through their ATMs.”
The value of notes issued to the public in the month since demonetisation is lower than the stock of 2000 rupee notes that the RBI says it had on the day the move was announced by the Prime Minister.
Does this mean that the new currency notes that have been printed since then haven’t been introduced into the banking system?
Mohan Guruswamy, the head of the Centre for Policy Alternatives said that the remonetisation is not going according to plan because the government and the RBI initially tried to introduce 2000 rupee notes without printing 500 rupee notes. But when they discovered that people couldn’t break the 2000 rupee notes in the market, they changed course and gave priority to distributing 500 rupee notes.
But the matter gets more curious.
The RBI reply contains another number that doesn’t seem to fit in. In reply to a question about the value of “old denomination” 500 and 1000 rupee notes on November 8, the RBI’s reply is thus: The value of 500 rupee notes was Rs 11.38 lakh crore while 1000 rupee notes was Rs 9.13 lakh crore, giving a total value of Rs. 20.5 lakh crore.
But the government has said that the total value of demonetised currency is Rs. 15 lakh crore. An affidavit filed in the Supreme Court by the Central Government states that:
“As per the Weekly Statistical Supplement, the notes in circulation as on November 4, 2016 stood at Rs. 17,74,187 crores. Roughly 86% of this value i.e. Rs 15,25,800 crore comprise of notes of denominations Rs 500 and Rs 1000.”
There is a discrepancy of Rs 5.25 lakh crore in the figures given by the RBI and furnished by the government.
Efforts by News18 to speak to officials in the RBI proved futile. The Public Information Officer of the RBI, P. Vijay Kumar, refused to speak to News18 despite repeated telephone calls and requests. Reserve Bank Spokesperson Alpana Killawala was also unreachable.
Sources with knowledge of the matter said that the discrepancy makes sense if the Rs 5.25 lakh crore was money lying in the RBI’s currency chests. When they are in the chest they are just pieces of paper with no intrinsic value till they are issued to the public, at which point they become liabilities. The RBI also doesn’t need to mention this amount in its annual reports or bulletins.