99.16% Demonetized currency returned to the system. ₹ 12977 Crore did not return - FACTLY
Sai Krishna Muthyanolla
August 30, 2018
The RBI has finally finished counting & verification of all demonetized currency that returned to the system. As per the latest annual report of RBI, 99.16% of the total demonetized currency returned to the system. The high value currency now accounts for 80% of the total currency in circulation.
The Reserve Bank of India (RBI) recently released its annual report for 2017-18. In the report, RBI mentioned that the processing & verification of demonetized currency that returned to the system is complete. As per the report, a total of ₹15310.73 billion of demonetized currency returned to the system. This represents 99.16% of the total demonetized currency on 08 November 2016. A mere ₹129.77 billion (0.84%) did not return to the system.
More than 99% of both ₹500 & ₹1000 returned to the system
As on 08 November 2016, 17165 million pieces of ₹500 notes & 6858 million pieces of ₹1000 notes were in circulation as per the information shared by the government in the Lok Sabha. This translated to ₹8582.5 billion worth ₹500 notes and ₹6858 billion worth ₹1000 notes that were demonetized. In all, currency notes worth ₹15440.5 billion were demonetized. As per the latest annual report of the RBI, ₹15310.73 billion of the demonetized currency (representing 99.16%) has returned to the system. In other words, only ₹129.77 billion did not return to system. In terms of denomination, demonetized notes worth ₹63.77 billion in ₹500 and ₹66 billion in ₹1000 did not return to the system.
High value currency accounted for 80% of the total currency in circulation by March 2018
One of the reasons for demonetization as mentioned by the government was to reduce the proportion of high value currency out of the total currency in circulation. As per the latest annual report of RBI, the high value currency ( ₹2000 & ₹500) accounted for more than 80% of the total currency in circulation by value as of March 2018. This is an increase of 7% from March 2017 when the high value notes accounted for 73% of the total currency. Part of the reason could be that the printing of new notes and their introduction into the system was still in progress in 2017. The current value of 80.5% is lower than the value in March 2016 when the high value notes accounted for 86.4% of the total currency in circulation. It remains to be seen if the increasing trend would continue in the subsequent years.
More than ₹12000 crore spent on printing currency notes in 2 years
As per the latest RBI annual report, an expenditure of ₹12877 crore was incurred in printing new currency in the two year period from July 2016 to June 2018. This is almost equal to the total amount of demonetized currency that did not return to the system. An amount of ₹7965 crore was spent in 2016-17 (July 2016 to June 2017) while an amount of ₹4912 crore was spent in 2017-18 (July 2017 to June 2018) on printing of new currency notes.
No new ₹2000 notes being printed
It is also clear from the annual report that the printing of new ₹2000 notes is stopped. Compared to the 3504 million pieces of ₹2000 notes that were supplied in 2016-17, only 151 million pieces were supplied in 2017-18. On the other hand, 9693 million pieces of new ₹500 notes were supplied in 2017-18 compared to the 7260 million supplied in 2016-17. The data also makes it clear that there was huge short supply of ₹100 notes. While RBI put an indent for 8068 million pieces of ₹100 notes in 2017-18, only 3170 million pieces were supplied. This could be due to the change in design of the ₹100 note. In 2017-18, 2832 million pieces of ₹200 notes were also supplied.