The Reserve Bank of India’s report that nearly all the demonetised currency has come back into the system shows that the exercise converted black money worth up to Rs 4 lakh crore into white money, former Finance Minister P Chidambaram told ANI on Friday. The main purpose of demonetisation was to let people with black money convert it into white, he said.
“The government claimed Rs 3 to 4 lakh crore will not return to the Reserve Bank of India and that will be black money stock...” Chidambaram was quoted as saying. “If all [demonetised currency] has come back to the Reserve Bank of India, then the logical conclusion is that Rs 3-4 lakh crore of black money has been converted to white.”
He added: “So, there is a suspicion, in fact it’s a charge, that you [government] devised this demonetisation only to enable people with black money to convert it into white.”
Chidambaram’s comments come two days after the RBI, in its annual report, said over 99.3% of the banned banknotes in circulation before demonetisation have been returned to it. He suggested that Finance Minister Arun Jaitley had no information about demonetisation.
“In fact, many of us think that the finance minister was not taken into confidence when demonetisation was announced,” he said.
On Thursday, Jaitley said demonetisation led to formalisation of the economy, increased tax collection and higher growth. The positive impact also included bringing back more money into the system, higher expenditure, and a higher growth after the first two quarters, he said.
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