Has demonetisation tackled black money? Finance Ministry explains in four points

Key Highlights: 

• Old Rs 500 and Rs 1000 were scrapped on November 08, 2016 to tackle black money
• RBI's annual report says 995 of banned banknotes are back into system
• Jaitley says demonetisation main object was to increase tax base in India

Finance Minister Arun Jaitley on August 30 made it clear that the object of demonetisation was not confiscation of money, but significantly altering India's pre-dominantly high cash economy towards a less-cash one. 

He said, “We intended to give a blow of black money and for doing that expand the tax base of the country. It is obvious that post demonetisation, the direct tax base has already started expanding substantially.”

There were lot of questions asked after when the Reserve Bank of India (RBI) released its annual report 2016-17 and revealed that Rs 15.28 lakh crore – or 99% of the Rs 15.44 lakh crore demonetisated by withdrawal of old Rs 500 and old Rs 1000 notes – came back to the system.

Taking into consideraton, the value of specified bank notes now reported to have been counted approximately 98.96% of SBNs in value terms – have been deposited to the RBI post demonetisation. Thus, only an estimated Rs 16,000 crore worth of scrapped SBNs have not returned to RBI.

Jaitley said, “Nearly how much money comes back to the system and how much does not, that was never the real object of demonetisation.”

 99% of scrapped 500, 1,000 rupee notes back in system: RBI