The Centre on Friday told the Lok Sabha that it has not studied or assessed the impact that demonetisation had on the economy. Minister of State for Finance P Radhakrishnan said this in response to a question asked in the House on the “after-effects” of demonetisation.
In an address to the nation on November 8, 2016, Prime Minister Narendra Modi had announced that banknotes of Rs 500 and Rs 1,000 would cease to be legal tender that midnight. He had said this would end the flow of black money and fake currency.
However, a report by the Reserve Bank of India in August said that 99.3% of the currency that was in circulation that day returned to the banking system, indicating that a lot of money that was thought to be black may also have come back in the mainstream economy. Besides, the decision was blamed for dragging India’s GDP growth down to 5.7% in the first quarter of 2017.
In Lok Sabha on Friday, Union Finance Minister Arun Jaitley denied that the Reserve Bank of India had “rejected” two key justifications of demonetisation – curbing black money and counterfeit notes – while giving its approval to the decision, as claimed by a report in The Indian Express in November. According to the news report, the central bank had told the government that the impact on black money and fake notes would not be significant.
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