Demonetisation made economy leaner by Rs5,00,000 cr: report
25 May 2017
The 8 November 2016 demonetisation of Rs1,000 and Rs500 notes announced by Prime Minister Narendra Modi, in a major assault on black money, fake currency and corruption, has helped the economy turn leaner by about Rs5,00,000 crore, says a report.
An India Today report citing a high-level internal assessment report of the government on the drive said the demonetisation move has given the economy a Rs5,00,000-crore advantage.
The junked Rs500 and Rs1,000 notes, accounted for 86.4 per cent of the country's pre-demonetisation circulating currency.
According to the report, currency worth Rs17,77,000 crore was in circulation in the economy at the time of demonetisation. The annual increase in money circulation is speculated to have taken banknotes in circulation to Rs19,25,000 crore by May 2017.
''However, according to RBI figures, at the end of April this year, the total amount of currency in circulation was Rs 14,20,000 crore,'' India Today said quoting the report.
''This means that the economy now has roughly Rs5,00,000 crore cash less than the amount it would have had if note ban had not happened,'' it further added.
Total money in circulation at the time of demonetisation stood at Rs17,77,000 crore. Out of this, Rs15,44,000 crore was in high denomination notes, which were phased out. Rs2.33 lakh crore was in small denomination notes with a value of Rs100 or less.
The demonetisation advantages report of the Modi government says that with Rs14,20,000 crore of currency the economy is able to meet all its transactional requirements. This means that the economy now has leaner by Rs5,00,000 crore of cash. This essentially means that the amount of cash stashed away by citizens has come down.