Then reality struck, hard. Chaos reigned. People started dying in bank queues and in hospitals unable to pay for treatment; many dears were lost by those who could ill-afford it, standing in the interminable queues in front of ATMs which didn’t have any money or were unable to dispense currency notes for which they were not calibrated; rules and regulations were changed almost by the hour; decisions were taken and rolled back on the fly; rumours flew thick and fast about currency notes that had chips embedded in them which will lead the IT and ED sleuths right into dungeons of ill-gotten hoards of cash and of river Ganges being submerged with discarded currency notes. In short, it was a circus of sorts where the public didn’t realise they were the clowns.The audacity with which narratives were changed, the unabashed ways in which goal posts were shifted, and the insensitivity with which people were taken for granted beggared belief. The media, instead of calling the bluff, played up the risible parts such as notes embedded with chips.If demonetisation did nothing else, it did throw the Indian rural and informal economy truly and irretrievably under the bus. As against the 50 days begged for by the Hon’ble PM of the country, it took more than nine months to pump in currency to get the economy back on its wobbly legs again. Necrosis happens in heart muscles when it is starved of blood for a certain amount of time – its muscles die and it can never work with the same efficiency to pump the blood. What happened with the Indian economy was necrosis as a result of 86% of its currency in circulation being withdraw in one fell swoop, with no forethought, no planning, and apparently on a whim.In these nine months, India’s GDP tanked, and hundreds of thousands of small businesses went bust, and many more millions of people lost their jobs and means of livelihood. Agricultural produce rotted in mandis as there were no buyers. Entranced by the story told to them by a snake oil salesman who dangled the carrot of a clean, corruption-free India, the public grinned and bore the tribulations of living in a cash-depleted economy as they had visions of the evil rich getting their comeuppance and being found out and put behind the bars.Schadenfreude more than made up for their own angst and anguish. The dreams before them were further embellished with stories of each Jan Dhan account holder getting money apportioned from the surplus RBI would have from the unreturned money destroyed by the scared black-money holders. The purpose of the present exercise is to crunch numbers—available in the public domain—to get a true picture of the outlandish promises made and the stark reality which is now front of us.Return Of The Specified Bank NotesAnalysing the trend, on 12 December 2016, I had made a prediction in my blog that a minimum of ₹15 lakh crore would be returned to the system. Finally, after eight and a half months, the RBI Annual Report of 2016-17 disclosed that as on 30 June 2017, they had received ₹15.28 lakh crore of SBNs. The latest RBI report of 2017-18 dated 24 August 2018 disclosed that the final tally of SBNs was ₹15.311 lakh crore, which means 99.2% of the SBNs have been returned to the system, shattering, as indicated before, the dreams of windfall gain which the panjandrums in the government and their drum-beaters were talking up during the first month of the demonetisation.Disposed Soiled Notes Are More Than SBNsThe RBI had disclosed in Parliament that there were 17,165 million pieces of ₹500 (8.582 lakh crore) and 6,858 million pieces of ₹1000 (₹6.858 lakh crore) in circulation on the date of announcement of demonetisation (total Value of ₹15.44 lakh crore and a total volume of 24,023 million pieces).It is mystifying to note that Table VIII.7 of the RBI Annual Report 2017-18 shows that 20,024 pieces of ₹500 and 6,847 million pieces of ₹1000 were disposed of as soiled notes, i.e. which means if this is also added to the returned SBNs, a total value of ₹16.859 lakh crore was received against the ₹15.311 lakh crore of SBNs said to have been received! An important fact that should not be missed is that during 2016-17, around ₹3.3 crore of SBNs were also disposed of as soiled notes, which is 61% more than the previous year’s SBN figure.Compartmentalised accounting such as these do raise clouds of suspicion in the wake of the overall figures put out by RBI, as they have been very cagey with explanatory notes on such anomalies.
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