India PM plans cabinet revamp, some ministers offer to quit

Nearly all of the banned currency notes were returned to banks, in contrast to expectations in some quarters that income tax evaders wouldn’t deposit any unaccounted wealth for fear of prosecution.

These remarks by senior Congress leader Anand Sharma come in the wake of the RBI’s annual report on Wednesday that revealed that Rs 15.28 lakh crore of high-value currency notes had returned to the system by way of public deposits – in short, that the experiment had been a failure.

Prime Minister Narendra Modi personally led the shock move last November to outlaw 86 percent of the cash in circulation to target undeclared “black money” and fight corruption.

Chidambaram said 99 per cent of the scrapped Rs 500 and Rs 1,000 notes had been legally exchanged and asked if the Modi government’s demonetisation decision was “designed to convert black money into white”. As they say, bad economics can often be good politics. Modi was quoted by local media as saying that evaders were throwing their notes into the Ganges river. By January, it was generally assumed that most of the extinguished currency would find its way back; the RBI data affirm these assessments.

In a separate statement, the government said the transactions of more than 300,000 companies were under suspicion post-demonetisation, while 37,000 shell companies had been identified as involved in hiding black money. And, therefore, over a medium- and long-term, there will be a positive impact on the economy.

Addressing a huge rally at Khelgaon here, he said GST helped reduce transport cost and increase the earning of drivers of trucks and tractor trolleys.

He also said the government had a net loss due to demonetisation. The slump has been attributed by several economists to the cash crunch.

“But, we know that if we have to take the nation to new heights, there is a pressing need to modernise our infrastructure”, Modi said. “Crores of common people – farmers, workers, those engaged in informal sector, small enterprises and other most vulnerable sections of society suffered massive pain”. It is important to realise what was the Indian normal for last 70 years.

Accusing Modi of obfuscation, he said figures given by RBI had “again exposed” the government, and the “demonetisation scam” had “not only dented institutional sanctity of RBI, but also credibility of India abroad”. This has not gone down well with ex-finance minister P. Chidambaram who reacted to the RBI reports through a series of tweets. He had observed that even in advanced economies like United States of America, which uses less paper money, a record $14 trillion was feeding tax evasion, corruption, terrorism, drug trade and human trafficking.Kenneth recommended that demonetization process should be slow, calibrated and properly planned, and allow small denomination currency to be in circulation. It’s now official – 99 per cent of the extinguished currency or ₹15.29 lakh crore out of ₹15.44 lakh crore has returned to the banking system.