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The Reserve Bank of India’s annual report has been eagerly awaited this year for what it says on the subject of currency management.
With demonetisation dominating the national discourse last year, it was natural that there would be some curiosity about what the central bank had to say on the measure that pulled out 86 per cent of the value of currency in circulation by demonetising notes of denominations ₹500 and ₹1,000 in November last.
The RBI, while sharing regular updates on the amount that came in during the period between November 9 and December 31, went into silent mode after that and did not share any numbers on the total volume of notes that have come back and how much didn’t.
Even parliamentary committees were unable to get the RBI to share that information and it was only met with an answer that counting was still in progress.
Tucked away in a corner of the report is a table that gives the bank notes in circulation at the end of March 2017. One has to presume that those notes didn’t come back into the RBI. Going by that surmise, about 89 million pieces of the ₹1,000 note (value of ₹8,900 crore) didn’t come back. To put that in perspective, in the previous year, 6,326 million pieces of ₹1,000 notes valued at ₹6,32,600 crore were in circulation.
Similarly, in the case of ₹500 note about 5,852 million pieces worth ₹2,94,100 crore were in circulation at the end of March 2017.
In terms of volume of notes, the ₹500 denomination notes were about a third of what was in circulation in the previous year.
The annual report also mentions that the central bank spent ₹7,965 crore in 2016-17 (July-June) on printing notes. This was more than double the previous year’s expense on the printing account, which was just ₹3,420 crore.
The re-monetisation exercise undertaken by the government where it pumped money in the form of new ₹2,000 notes and new ₹500 notes as well as the logistical exercise of airlifting them to various centres had caused this sharp increase in expenses.
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