Report claims Indian economy roughly has lesser cash flowing than what was in circulation before note ban.
Mumbai: Believe it or not but it is a fact. Prime Minister Narendra Modi's 'abrupt' decision of recalling old notes has benefited India's $2 trillion economy. This is how: A high level internal report prepared by government has revealed that demonetisation has given Indian economy an advantage of Rs 5 lakh crore, according to a report in India Today.
Prime Minister Narendra Modi on November 8 last year in a televised address informed the people that his government was ending legal tender status of Rs 1,000 and Rs 500 currency notes by the stroke of midnight.
These old high denomination (OHD) currency notes were more than 86 per cent of total currency in circulation at the time of their recall. The decision led to severe cash crunch in country and threw people at ATM booths and bank counters.
The India Today report claims that there were around Rs 17.77 lakh crore worth of currency notes in circulation around November 8 last year when note ban was effected overnight. It is believed that had the drive of demonetisation not taken place, total currency in circulation would have now gone up to Rs 19.25 lakh crore worth.
In April this year, the Reserve Bank of India in its briefing on total currency in circulation said that total currency in circulation by April-end in country was Rs 14.2 lakh crore. "This means that the economy now has roughly Rs 5 lakh crore cash less than the amount it would have had if note ban had not happened,” the report said.
However many experts had said at that time that demonetisation drive would surely leave some negative effect in shorter term due to which the common man would face certain hardships. Finance Minister Arun Jaitley had also flagged some concerns and said that note ban blues will last only for a short period of time.