Two years since Prime Minister Narendra Modi used the shock-therapy of demonetisation to push India into a cashless mode, it seems there are more currency notes in circulation since the pre-November 8, 2016 era. The data was revealed by the annual report published by the Reserve Bank of India recently. However, despite pronounced spike in the number of currency notes printed by the official presses, there has been a decline in the cost of printing new notes.
According to the official data, the total supply of banknotes by Bharatiya Reserve Bank Note Mudran Pvt. Ltd (BRBNMPL) and Security Printing & Minting Corporation of India Ltd (SPMCIL) amounted to 2,919.1 crore pieces in 2018-19. These two companies are responsible for printing banknotes on behalf of the RBI. This was higher than the number of pieces supplied in previous years, including 2016-17, when demonetisation happened.
Following the note ban, old notes were allowed to be deposited in banks, with unusual deposits coming under the Income Tax department's scrutiny. A collateral damage as a result of rise in printing and other cost was dividend RBI paid to the government. The RBI had said its income for 2016-17 decreased by 23.56 per cent while expenditure jumped 107.84 per cent.
Meanwhile, in other related news, the number of Rs 2,000 banknotes have seen a massive drop in the circulation. The number of outstanding notes has shrunk by 7.2 crore to 329 crore in FY19.
It should be noted that the Reserve Bank of India's contingency fund, useful in fighting any exigency, has plunged to Rs 1.96 lakh crore as of June 30, after the Rs 52,000 crore excess payout to the government, says the central bank's annual report for FY19. The RBI board has decided to transfer the excess reserves to government based on the Bimal Jalan committee report on the appropriate economic capital framework.
In the annual report, the central bank makes it clear that as of June 30, 2019 it "stands as a central bank with one of the highest levels of financial resilience globally." After the payout to the government, "the balance in the contingency fund as of June 30, 2019 was Rs 1,96,344 crore compared to Rs 2,32,108 crore as of June 30, 2018," the annual report said.