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20
December 2016
 |
ATM (The Total Investment & Insurance
Solutions)
Several new and large discrepancies have
emerged in the stated positions of the Reserve Bank of India (RBI) and the
government on the printing and distribution of new currencies following the
demonetisation of Rs 1,000 and Rs 500 notes on November 8. The Total Investment & Insurance
Solutions
These discrepancies include a highly unlikely
surge in the supply of high-denomination notes in two days. They also show
substantial divergence in figures given by the central banker and those given
by the government in Parliament. And finally there's an unexplained hiatus in
the supply of notes for 11 days.
Either parliament has been misled, or claims
about the supply by the RBI are flawed.
Let's look at the figures in chronological
order:
On November 28, the RBI issued a press
release saying that the public had withdrawn Rs 2.16 lakh crore in new notes
from accounts or ATMs till November 27. As RBI chose not to give any break-up
of this amount, it is fair to assume that some of this was in lower
denomination notes of Rs 100 or less.
However, according to a written reply to a
question in the Rajya Sabha, the Minister of State for Finance, Arjun Ram
Meghwal, categorically stated that, by November 29, a total of 1,608 million
pieces (160.8 crore) of Rs 2,000 denomination and 156 million (15.6 crore)
pieces of Rs 500 had been supplied -- a total of 1,764 million pieces (or 1.76
billion) amounting to a little over Rs 3.29 lakh crore. The minister's reply
came on December 6. The Total
Investment & Insurance Solutions
There are two significant points to note
here:
One, that the government's number implies
that the currency disbursal had shot up by over Rs 1.13 lakh crore in just two
days. This, when the RBI had supplied Rs 2.16 lakh crore in 17 days till then
-- at an average of only Rs 12,700 crore a day.
Moreover, Meghwal's number pertained only to
high denomination notes, whereas the RBI number was a mix of all denominations.
In other words, the discrepancy between the two sets of numbers would have been
even higher if the minister's reply in Parliament had included the smaller
denomination currency notes disbursed till November 29. The Total Investment & Insurance Solutions
Now things begin to get even more curiouser.
On the day the monetary policy was announced
(December 7), the RBI revealed a new set of disbursal figures. The Deputy
Governor of RBI, R. Gandhi, said a total of Rs 4 lakh crore had been disbursed
as of the previous day. The Total
Investment & Insurance Solutions
Of this amount, Rs 1.06 lakh crore was in
smaller denomination currency notes, according to Gandhi, while the rest -- Rs
2.94 lakh crore -- implicitly, was by way of high-denomination notes.
This figure of Rs 2.94 lakh crore, which was
announced seven days after the date of disbursal given in Parliament reply, is
substantially less than the amount of Rs 3.29 lakh crore mentioned in the
minister's written statement about supply till November 29.
Yet again, on December 12, Gandhi, while
speaking to reporters, said that a total of 1.7 billion notes of higher
denomination of Rs 2,000 and Rs 500 had been issued to the public till December
10.
That means, a full 11 days after Meghwal's
reply that 1.76 billion high-value notes had been disbursed by November 29, the
RBI was stating that the notes given out had been less or at best the same --
if one assumes that he was giving a rounded-off figure of 1.7 billion.
Was the disbursal or printing of new notes
stopped from November 29 to December 10?
How does the RBI square with these
discrepancies?
Further, the government has been talking
about the printing presses working overtime. Economic Affairs Secretary,
Shaktikant Das, told Doordarshan in an interview on December 17 that 80 per
cent to 90 per cent of the currency being printed a few days after the
demonetisation date was of Rs 500 notes.
According to Meghwal's information, the
amount of Rs 500 notes supplied till November 29, a full 20 days after
demonetisation, was only Rs 7,800 crore (15.6 crore notes).
In comparison to the value of notes that were
demonetised -- Rs 8.58 lakh crore -- the new Rs 500 notes amount to less than
one per cent (0.91 per cent). The Total
Investment & Insurance Solutions
If we take Gandhi's words at face value,
then, even on November 10 -- more than a month after demonetisation came into
effect -- there was not much change.
Of course, the Rs 2,000 notes, which the
Economic Affairs Secretary has said were being printed for "months"
are considerably more in circulation.
The Total Investment & Insurance Solutions
The value of such notes supplied on November
29 was Rs 3.21 lakh crore (160.8 crore x Rs 2,000) -- almost 47 per cent
compared to value of Rs 6.86 lakh crore (of Rs 1,000) demonetised. But Rs 2,000
notes are not easy to spend and have created a bottleneck in the cash economy.
Again, according to Gandhi's information,
till December 10, there seems to have been no change even in the Rs 2,000 notes
circulated. The Total Investment
& Insurance Solutions
The shortage of notes, it seems, would
continue much beyond the 50 days that the prime minister has mentioned.The Total Investment & Insurance
Solutions
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