Where is the black money? 97% demonetised notes deposited in banks by Dec 30

Almost 97 percent of the now defunct Rs 500 and Rs 1000 notes have been deposited with banks as of December 30, a Bloomberg report has said.

The new service, while quoting two sources who are in the know of the matter, said that banks had received Rs 14.97 lakh crore by the last date for depositing the demonetised currency.

The numbers, however, are provisional and could be revised.

Following Prime Minister Narendra Modi’s decision to demonetise high value currency on November 9, around Rs 15.44 lakh crore worth of notes circulating in the market had become defunct, representing around 86 percent of all currency.

However, reportedly, by December 28 around Rs 14 lakh crore or 90 percent of all demonetised currency had been deposited in banks.

At the time, the government had estimated that scrapped notes worth around Rs 3 lakh crore would never make it back in the system.

There was also speculation that this amount could constitute windfall gain for the RBI and could be transferred to the Centre as special dividend, although some RBI officials had denied the possibility of doing so.

If the figures are accurate, it would imply that at least 97 percent of all currency in India was accounted for and not undisclosed, essentially rendering the war on black money defunct.

It would also raise serious questions about the government’s drive to unearth unaccounted wealth and fight corruption.

In addition, the cash crunch and business slowdown post demonetisation could also hurt the economy in the short run and strip India of its position as one of the world’s fastest-growing major economies.