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Data provided in Lok Sabha proves that demonetisation failed: Congress MP Uttam Kumar Reddy

HYDERABAD: N Uttam Kumar Reddy , Congress MP from Telangana, on Monday said the data provided by the Union finance minister in Lok Sabha to questions raised by him has proved that the demonetisation was poorly executed, had severe economic consequences and failed to achieve its objectives.

“Demonetisation was supposed to reduce black money by reducing cash in circulation but the data submitted by the Union finance ministry shows that the Currency in Circulation (CiC) and the value of Notes in Circulation (NiC) almost doubled post-demonetisation,” he said.



While the CiC in March 2016 was Rs 16,63,300 crore, it stood at Rs 31,33,691 crore in March 2022. Even the volume and value of Notes in Circulation (NIC) increased significantly post-demonetisation, he said, quoting the statistics submitted by the Union ministry in a written reply to the Congress MP.

The Union finance minister, in her written reply, said that the mission of the government was to move towards a less cash economy to reduce the generation and circulation of black money and to promote the digital economy.

The objectives of withdrawal of legal tender character of specified bank notes (Rs 1,000 & Rs 500), as stated in the Gazette notification S.O. 3407 (E) dated November 08, 2016, issued by the Government of India, was to contain the rising incidence of fake currency notes which were largely in circulation; to limit the usage of high denomination bank notes for storage of unaccounted wealth and to contain the rising level of using the fake currency for financing subversive activities like drug trafficking and terrorism.

The demonetisation caused immense suffering to the citizens. It was supposed to handle black money by reducing cash in circulation. The growth of digital payment systems in India has been advertised as a massive success but data suggests that the use of cash continues to only grow, Uttam said.

Though Prime Minister Narendra Modi claimed that demonetisation was aimed to curb the circulation of black money, the move did not result in the detection of a significant amount of black money.

According to the Reserve Bank of India (RBI), around 99.3 per cent of the banned currency notes were deposited back into the banking system, which means that the holders of black money were able to get new currency notes for their old currency notes, Uttam alleged.

"Is it true that the majority of black money has always been held in gold and real estate, and it continues to be held that way while the government chose to target only cash which primarily harmed salaried class and small businesses which rely on cash?" he said.

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