Anurag Thakur told the Rajya Sabha that objectives of demonetisation were flushing out black money, eliminating fake currency notes, and boosting digitisation. (File)
Allaying fears that the government is likely to withdraw Rs 2000 denomination note, Minister of State for Finance Anurag Thakur Tuesday said there was "no need to worry about it".
In the Rajya Sabha on Tuesday, Samajwadi Party's Vishambhar Prasad Nishad asked whether the government is planning to re-introduce Rs 1000 denomination note to replace Rs 2000 denomination note. "Black money has increased by introduction of Rs 2000 denomination note. There is misconception among people that you are going to introduce Rs 1000 denomination note again to replace Rs 2000 denomination note," he asked.
In reply, Thakur said, "This is the real worry (about demonetisation) which has surfaced now. I think that you should not worry about it."
Thakur also told the House that objectives of demonetisation were flushing out black money, eliminating fake currency notes, strike out terror financing and Left-wing extremism, non-formal economy to a formal economy to expand tax base and boost digitisation.
The government had in November 2016 demonetised Rs 1,000 and Rs 500 denominations notes.
Thakur, however, admitted that the currency in circulation has indeed increased in the three years since demonetisation. As on November 4, 2016 were Rs 17,741.87 billion which have now increased to Rs 22,356.48 billion as on December 2, 2019.
The Rs 4,60,000-crore rise in the currency in the system in the past three years indicates that cash is still ruling the roost in the financial system despite the big push in digital transactions and less cash economy. CIC has increased by Rs 2,84,799 crore in the last 12 months alone, as per the data available from the Reserve Bank of India (RBI).
After the notes were withdrawn from circulation on November 8, 2016, nearly all of that money came back to the banking system. The RBI received Rs 15.310 lakh crore of Rs 500 and Rs 1,000 notes, or 99.3 per cent of the Rs 15.417-lakh crore worth of notes, which were in circulation as on November 8, 2016.
According to a recent RBI study on digital payments, although digital payments have been growing gradually in recent years, both in value and volume terms across countries, the data suggest that during the same time CIC to GDP ratio has increased in consonance with the overall economic growth.