New Delhi: The notes in circulation (NIC)
in the economy have increased to Rs 22,420 billion in November 2019, as
compared to Rs 17,741 billion on November 4, 2016, just before Prime
Minister Narendra Modi announced the demonetisation measure, according
to latest data.
While this implies an increase in notes even
after demonetisaion, Minister of State for Finance Anurag Thakur,
however, said in a reply in Parliament on Monday that demonetisaion and
digital cash initiatives succeeded in reducing the notes in circulation
by as much as Rs 2,934.80 billion rupees.
The logic for this
given by the government is that NIC had grown at an average growth rate
of 14.51 per cent year-on-year from October 2014 till October 2016.
this rate, the NIC would have increased to Rs 25,354.93 billion as on
November 25, 2019. As the actual NIC on the said date is only Rs 22,420
billion, demonetisation followed by digitalisation and reduction of cash
use in the informal economy has succeeded in reducing NIC by as much as
Rs 2,934.80 billion.
Thakur said that the government decided to
cancel the legal tender status of Rs 1,000 and Rs 500 notes on November
8, 2016, with several objectives, including flushing out black money,
eliminate fake Indian currency notes, to strike at the root of terror
financing and left wing extremism, to convert the non-formal economy to a
formal one with a view to expand the tax base and employment and to
give a big boost to digitalisation of payments to make India a less cash
Thakur also claimed that demonetisation resulted in curbing of the counterfeit currency.
Reserve Bank of India (RBI) has reported that 7.62 lakh pieces of
counterfeit bank notes were detected in the banking system during
2016-17, 5.22 lakh pieces in 2017-18 and 3.17 lakh pieces in 2018-19.
also resulted in significant impact in most theatres of violence in the
country. Since illegally held cash forms the major chunk of terrorist
funding, after demonetisation, most of the cash held with the terrorists
In addition, during November 2016 to March
2017, the Income Tax Department conducted search and seizure operations
leading to seizure of Rs 900 crore.
To further substantiate the
benefits of demonetisation, the government said there has been an
increase in employment. It quoted the Statistics Ministry's Annual
Survey of Industries for the fiscal ending March 2018 which shows an
increase in the jobs in the organized manufacturing sector.
201-15 to 2017-18, the total number of workers has increased by 14.69
lakh and total persons engaged has increased by 17.33 lakh in the
organised manufacturing sector in India.
Apart from this, 285.3
lakh members joined the Employees Provident Fund Scheme (EPF), 310.3
lakh joined the Employees State Insurance (ESI) scheme and 15.7 lakh
joined the National Pension Scheme (NPS) during September 2017-19.
government has also alluded to the significant increase in the use of
digital payments in the country since demonetization. In fiscal 2016-17,
the total number of digital transactions were 1,023 crore, which
increased to 2,070 crore in the next year with a jump of 104 per cent
and to 3,133 crore in 2018-19, recording a jump of 51.35 per cent.