The window given for regular deposits of old currency notes under demonetisation expired on 30th December 2016.
As reported by Swarajyamag.com, in the last couple of days, some media outlets have run speculative reports claiming that most of the demonetised currency has come back into the banking system. A Bloomberg report said yesterday that Indians have deposited 97 per cent of the demonetised notes till 30 December. Business Standard report claimed that the figure was 94 per cent.

The Indian Express based its post on the Bloomberg’s data and asked whether: “Demonetisation complete failure?” since 97% of the notes came back. No other argument was put forth. Leftist site thewire.in also made similar arguments, albeit with slightly different figures. Firstpost’s Sandipan Sharma too toed a similar line:

But, on current evidence, it seems most of the money may actually end up getting legally tendered in banks, entering the system as white money. Whither kala dhan?

So why do they say that demonetisation has failed since most of the cash has come back into the system? This claim could partly be based on this theory, which was first started by the media itself:

Currency Notes issued by the RBI are RBI’s liabilities to the bearer of the notes. Since due to demonetisation, after 30 December certain notes stop being legal tender, they will not be RBI’s liabilities any more, and a waiver of liabilities would result in an accounting profit for the RBI, which could then be passed on as dividend to the Government of India.

This theory was floated by the likes of the Indian Express, the Economic Times (twice) and also The Hindu Businessline. Many other sites promoted this theory too, but just a sample is being presented.

In early December itself, the RBI had itself stated that it had absolutely no plans to pass on as dividend to the government, the amount of money that does not come back into the system once the deadline of the demonetisation exercise expires on December 30, 2016. This one statement by RBI should have ideally shut up all those who claimed that a higher percentage of notes returning to the system would mean a bigger failure for demonetisation. But then, that would need them to be honest.

The other argument made to show that a higher percentage of money returning to banks is a failure of the scheme is the one placed by the likes of Sharma in Firstpost: “Whither kala dhan”, meaning, if all the money came back into the banks, it means there was no “black money”. The argument is based on the stupid notion that any money deposited into the banks is by default “white”.

The fact though is, “black” money can turn “white” only once you pay taxes on it. As such, all the money deposited in banks will have to be explained by the depositors by showing the source of income (on which tax has already been paid) or, the depositors will have to now pay tax on these deposits. And therein lies the key: contrary to what is being argued, a higher amount of money coming back can actually be good:

1. As explained above, every penny deposited will have to be explained and the appropriate tax on it will have to be paid. The tax can vary from 30% (regular income) to 50% (under the Pradhan Mantri Gareeb Kalyan Yojana) to even upwards of 80% (in case the depositor is caught cheating the tax department)

2. The above is just the one-time gain. There is also a recurring gain. Once a person deposits his cash into the bank, he indirectly alerts the tax department that he is capable of earning that much money over a few years. Take for example a trader who was never filing taxes previously. He now deposits say Rs 25 lakhs in cash into his accounts. Assuming he has accumulated such cash over 5 years, his annual net savings would be Rs 5 lakhs odd, and his annual income could be more than that. Till now, the tax department had no clue that this trader could earn such income. Now they know. And the tax department doesn’t forget. Not only will the trader have to pay tax on Rs 25 lakhs, henceforth, he will be on the radar of the tax department. Assuming that he goes back to his old ways and doesn’t file taxes in the future, now the tax department at least knows about him and knows how to catch him. There can never be any estimate of this recurring incremental tax being earned by the Government.

There are other arguments too, which would debunk this claim by media that a higher amount of cash returned is a sign that demonetisation has failed, for example lower interest rates etc, but these two key factors will have to be kept in mind. End of the day, the cabal which wants to declare demonetisation as a failure will have to work harder in the face of hard facts. more  

While there are repeated Seizure of Old Currency in Exchange of New Notes at discount in bulk after S.C. directions to GOI for extending time of exchange with explanations for non Exchange in time ; ONE CRORES WORTH OLD CURRENCY is Seized yesterday arresting 11 individuals engaged for Exchange with new Notes of those Exchanged through Back Doors and malafied Exchange . There is the need of absolute Vigilance as well as strict actions on those Exchanged Bags of Currency without Bank Accounts , and those rackets of groups opened as well as those held balance more than 2.5 lakhs . more  
Many unscrupulous bankers have helped black money holders to change old currency for new currency without going through any bank account by using the initial provision for cash exchange. This is how we have seen cases where bundles of new notes were caught (and as usual the culprits who have not been caught will be much higher in number). Since these notes have never seen the inside of a bank, the money is still black but in the form of new notes. Who is to estimate how much money has been gifted away by these degenerate bankers? more  
Thanks Sarma ji more  
Critics, Commentators naturally go in their manner . Criticism was suppressed by Citizen Support that identified . Commentators and Politicians for their existence in the News , and like others of news mania will say try for something to say for a comment sake . Demonetisation figures as of date discussed , even if are correct , the Campaign succeeded its goal of :- [ in my view ] 1. Funding for Crimes and Terrorist activities , Goondagiri , Massive postures etc., etc., were ended even temporarily . 2. Investigation reports found at places the Bulk of Currency was Fired in 3 and 4th week of this period of 7 weeks . 3. The Cash that was used by the Middlemen Mafia in Daily and Weekly markets was reduced and Small Farmers and Average Bulk Cultivators even on Tenancy were well addressed while only the Agents/Owners who purchased on Contract the Crops for Whole Sale market and Big Bazaars were suffered . This shows that the EASY EARNING AND EASY BUSINESSING IN THE MARKET FIELD WAS SET TO A REASONABLE CURTAIL . 4. As already cited in this Post , the Currency got Deposited into Banks identified those dealing bulk with Currency and , will be easy now to Assess and Tax suitably . This proves that the government's object to identify at ease many of those capable of Earning Taxable Income in Currency is 80% achieved . The Earning in other forms or reserving in other forms the Taxable Income will be found in due course on vigilance and TRACKING FURTHER AND FUTURE DEALS OF such Evaders IN THESE PROPERTIES . 5. Further , the another unknown success if this demonetisation is the VOLUME OF 0.5 LAKHS CRORES as per news figures PLUS THE VOLUME OF COUNTERFEIT CURRENCY that would be about 1.00 lakh Crores . The RBI figures about the Value of total Currency demonetised ; that was received in ; and the Value of Counterfeit Currency Found out of the value deposited ; ONLY WILL REVEAL THE CORRECT FIGURES . On the whole , my identification as set in the points 1 to 5 above are Correct if analysed and evolved as per the facts on ground and News . more  
Through demonetization this rudderless bhagwan bharose country of ours with one of the most stupid democracy of the world of which we proudly boast by saying OUR IS THE BIGGEST DEMOCRACY IN THE WORLD - behuda bhadda Democracy jis ke pach saal gujjar jate hai siyasat ka doar samalne mea and governance is ZERO.Five years the MORONS indulge in castism,vote bank politics,religion & language desh ya desh ka suraksha jai bhar mea.70 years of Congress rule has degraded PM & President office by making President of a lady who took care of household of a particular family and lady took AirCraft all over the world to sign tourism protocol & sight seeing tour.A clerk kept to take care of PM chair for 10 long years .Now to come to the point Through Demonetization the Govt can track/trace/detect/verify how much money is where and these people should be zeroed in to pay tax of last 70 years .Govt koe saab ki pehchan kerna chaihe aur unke halak se tax lena chaihe, if not in this Country only Employed people paid tax and Business man evaded tax for last 70 yrs. All Lawyer in tax profession come out with various loop holes to advise every businessman how to avoid tax and the tax lawyer gobbling up the the whole lot. more  
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