December 7, 2016

Expect all demonetised money to come back to system: Revenue Secretary Hasmukh Adhia

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THE government expects the entire money in circulation in the form of currency notes of Rs 500 and Rs 1,000 which have been scrapped to come back to the banking system so that the tax authority can trace the transactions and tax black money hoarders, Revenue Secretary, Hasmukh Adhia said on Tuesday. This, effectively, undermines the prospect of any windfall gains accruing to the government arising out of part of the demonetised currency remaining outside the banking system.


An estimated Rs 11 lakh crore has been deposited in banks so far and if the all the high-value notes in circulation comes back to the banking system as the Revenue Secretary indicated today, more questions are bound to be raised as to the cost and impact of the exercise of demonetisation spread over 50 days.

That’s because the Centre for Monitoring the Indian Economy or CMIE, an economic forecasting agency, has pegged the cost of demonetisation for 50 days from November 8 to Dec 30 at Rs 1,28,000 crore which includes loss of business or sales, cost to households, the expenses for printing fresh currency notes to the government and the RBI besides for banks. The onus will be on the government to show that the gains, including in the form of stiff penalties on those found violating rules, negate the cost of the exercise.


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