Note ban impact means 10 per cent currency won’t come back: Debroy

“Even now, Rs 1.6 lakh crore is what will be missing at the end of it all. If I take a base of roughly rounding off demonetised currency around Rs 16 lakh crore, 10 per cent of it is about Rs 1.6 lakh crore,” Debroy told IANS.

“Figures say that still Rs 1.5 lakh crore that has not come back. There is still a gap. People have made estimates that may be 10 per cent will not come back,” he added. 

Some reports have said about 97 per cent of the demonetised currency notes worth Rs 14.97 lakh crore had been deposited back as on December 30. The government had earlier estimated that about Rs 15.4 lakh crore of Rs 500 and Rs 1,000 notes – or 86 per cent of cash in circulation – will be taken out of the system. 

Meanwhile, the central bank has cast doubts on its own estimates.  “The periodical SBN (specified bank notes) figures released by us were based on aggregation of accounting entries done at the large number of currency chests all over the country,” it said. On December 10, 2016, deposits of Rs 12.44 lakh crore had been received. Till the reconciliation is done, actual numbers of the SBNs returned cannot be known, the RBI said. 

Debroy said the bulk of the old currency coming in is a positive indication. “If it doesn’t come back, then that currency is destroyed. It reduces RBI’s liability to that extent. For the amount that comes into the system, people must pay taxes, penalties, that is the money that comes to the government,” he said, adding the scrutiny of the money deposited in banks, however will take time. 

Demonetisation has checked the disproportionate cash in the Indian society, and that the cash-GDP ratio in India is way higher than its other Asian counterparts, Debroy opined. 

“Around 2000, the cash-GDP ratio in India used to be around 9 per cent while today it has gone up to 13 per cent. Obviously, the use of cash is disproportionately high to what is required for transaction purposes,” he said.