Demonetisation that was introduced in November 2016, has now backfired after RBI spent Rs 7,965 crore in 2016-17 on printing new Rs 500 and Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year.

RBI explained today, as much as 99 per cent of the junked Rs 500 and Rs 1,000 notes have returned to the banking system. This prompted the opposition to question the effectiveness of the government’s note ban decision to curb black money and corruption.

RBI has so far shied away from disclosing the actual number of junked currency deposited after November 8 last year, but finally in its Annual Report for 2016-17, it was divulged that Rs 15.28 lakh crore of the junked currency had come back into the banking system, leaving only Rs 16,050 crore out.

Although demonetisation was a measure to curb black money, corruption and check counterfeit currency but RBI said just 7.1 pieces of Rs 500 note per million in circulation and 19.1 pieces of Rs 1,000 notes per million in circulation were found to be fake in its sample survey.

Opposition grabbed on this data to snap at the government with former finance minister P Chidambaram quoting, “RBI ‘gained’ Rs 16000 crore, but ‘lost’ Rs 21000 crore in printing new notes! The economists deserve Nobel Prize.”

“Rs 16,000 cr out of demonetised notes of Rs 15,44,000 cr did not come back to RBI. That is 1 per cent. Shame on RBI which ‘recommended’ demonetisation,” he tweeted.

Chidambaram also wondered if demonetisation was “a scheme designed to convert black money into white?”

Samajwadi Party leader Naresh Agarwal said his party would move a privilege motion against RBI Governor Urjit Patel for misleading a parliamentary panel on the issue. RBI said just 8.9 crore pieces of Rs 1,000 notes or 1.3 per cent of the scrapped ones have not returned. It, however, did not give a specific number for the old 500 rupee notes.

“Subject to future corrections based on verification process when completed, the estimated value of specified bank notes (SBNs) received as on June 30, 2017 is Rs 15.28 trillion,” the central bank said.

After the note ban, old notes were allowed to be deposited in banks, with unusual deposits coming under income tax scrutiny. A collateral damage as a result of rise in printing and other cost was dividend RBI pays to the government. RBI said its income for 2016-17 decreased by 23.56 per cent while expenditure jumped 107.84 per cent.

“The year ended with an overall surplus of Rs 306.59 billion as against Rs 658.76 billion in the previous year, representing a decline of 53.46 per cent,” it said.

The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1,000 notes have been made yet. Instead, a new Rs 2,000 note was introduced post note ban.

RBI also disclosed that there are as many 588.2 crore of Rs 500 notes, both old and new and about 328.5 crore pieces of new Rs 2,000 notes were in circulation as of March 31, 2017. It has also circulated new Rs 200 notes last week. Former RBI Deputy Governor R Gandhi said demonetisation will have long-term impact.

Also read: RBI TO ISSUE RS 200 NOTE FROM TOMORROW

The RBI said the government has allowed District Central Cooperative Banks (DCCBs) to deposit the scrapped notes accepted by them from their customers during November 10 to 14. RBI is in discussion with the government with regard to the acceptance or otherwise of those notes held by citizens and financial institutions in Nepal.

The report also mentioned that during 2016-17, the number of suspicious transaction reports filed by banks and other financial intermediaries with the Financial Intelligence Unit “witnessed a quantum jump”, which was a positive indicator.

Banks, financial institutions and intermediaries reported as many as 4.73 lakh suspicious transactions in 2016-17 compared to about 1.06 lakh in the previous year. The report also indicated that the trail of deposits of the scrapped notes into bank accounts may provide valuable information to the revenue authorities in tracing unaccounted money.

Finally, the entire process of demonetisation and its outcome, experienced by every citizen of the country, was it all worth it?