Even as rise in cash post-demonetisation is being seen as a failure for government’s noteban exercise, Prime Minister Modi said currency in circulation would have been much higher had it not happened, CNBC TV18 reported.
Demontisation’s success could be measured by the fact that the operations of several bogus companies that looted the economy were identified and strict action was taken against the, he further said. The huge amount of money disclosed, as a result, reached the government coffers, he added.
Noteban also hit illegal companies and boosted economic growth, he noted in an interview to the TV channel.
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On March 15, 2019, cash in the economy surged nearly 19 per cent to an all time high of Rs 21.41 lakh crore from the before demonetisation level of Rs 17.97 lakh crore on November 4, 2016 implying that cash is back in use in the system, leading to the opposition and critics attacking the government.
The currency in circulation (CIC) surged by more than three lakh crore from Rs 18.29 lakh crore in March 2018, latest data from the Reserve Bank of India (RBI) showed. CIC dropped to nearly Rs 9 lakh crore in January 2017 after the government withdrew Rs 500 and Rs 1,000 notes from economy in November 2016.
Even though the government and RBI has been consistently pushing for a cashless society, currency in circulation has been rising gradually, the data showed. The government had cited the high level of cash in the system, counterfeit notes and black money as reasons for demonetisation.
On November 8, 2016, Modi government announced the demonetisation of all Rs 500 and Rs 1000 banknotes of the Mahatma Gandhi series. The government also issued new Rs 500 and Rs 2000 notes in exchange for the demonetised currency. The government claimed that the action would check the shadow economy and reduce the use of sham and counterfeit cash to fund illegal activity and terrorism and also promote digitisation.