The Reserve Bank of India (RBI) would complete the process of remonetisation “very soon”, finance minister Arun Jaitley said on Saturday. Demonetisation is the new normal confronting black money which was a norm in India for seven decades .
The Reserve Bank on Wednesday said nearly 83 per cent of the currency has been remonetised so far and denied there was any shortage of cash in the system. In an attempt to end the ongoing cash crunch, as much as 70% of the notes will be restored in value as legal tender i.e., get remonetized by February end.
A “reduced cash currency” would remain, but it would be supplemented by digital means, Jaitley said. More 100- and 500-rupee banknotes are set to be pumped into the economy after the government shelved plans to reintroduce Rs 1,000 bills, which were scrapped during last November’s demonetisation drive.
Printing of new notes is going on at a pace keeping in mind the less cash future and not the past and we welcome this new normal. The future belongs to money as a medium of exchange and not as a store of value
In a reply to questions in Lok Sabha, Minister of State for Finance Arjun Ram Meghwal on December 2, 2016, had said the day on which demonetisation was announced (November 8), there were 17,165 million pieces of Rs 500 notes and 6,858 million pieces of Rs 1,000 notes in circulation.
SBI had said in its report, “If we assume that the RBI continues to print as it is doing as of now, then by January-end, only about 67% of the currency should get replaced (vis-à-vis earlier estimate at 75%).” By February, at this rate, the RBI could thus print as much as 89% of the total currency, it had said.
On shortage of cash at ATMs, the deputy governor said in an area where there are seven to eight ATMs, there is always one or two ATMs which would be dispensing cash. Volume of trade, business will grow but size of paper currency will shrink. The balance of fewer currency will be replaced with other notes like e-wallets, credit cards and debit cards, finance minister said.
Until now, the RBI has reloaded about Rs 10 lakh crore into the system after sucking out Rs 15.44 lakh crore — which accounts for 17.16 billion notes — since November 8, 2016.
It’s difficult to estimate disruption in this quarter but the impact won’t last long.