PM Modi's demonetisation move gave Rs 5 lakh crore advantage to Indian economy: Report

PM Modi on November 8 last year had announced demonetisation of Rs 1,000 and Rs 500 notes in a major assault on black money, fake currency and corruption.

New Delhi: Prime Minister Narendra Modi on November 8 last year had announced demonetisation of Rs 1,000 and Rs 500 notes in a major assault on black money, fake currency and corruption.

A high-level internal assessment report of the government on the drive has found that the demonetisation move has given the economy a Rs 5 lakh-crore advantage, an India Today report said.

The junked 500 and 1,000 rupee notes, had made up 86.4 percent of the country's circulating currency.

India Today, which is in possession of the findings, pointed out that currency worth Rs 17.77 lakh crore was in circulation in the economy at the time of crackdown on old currency notes.

Now speculating, had the demonetisation drive not taken place the banknotes in circulation would have reached Rs 19.25 lakh crore by May 2017.

“However, according to RBI figures, at the end of April this year, the total amount of currency in circulation was Rs 14.2 lakh crore,” India Today quoting the report has said.

“This means that the economy now has roughly Rs 5 lakh crore cash less than the amount it would have had if note ban had not happened,” it further added.

As far as the negative impact of demonetisation is concerned, Finanace Minister Arun Jaitley had said, "When you switch over, it creates disruption. I don't see disruption lasting too long. You may see the impact for a quarter or so. Then when you look at next 12-15 quarters, it's certainly going to benefit."

Citing a few economic trends post demonetisation, the Minister said rabi sowing this season has been higher than last year, while auto sales were a mixed bag.

Speaking about the various advantages of the demonetisation, the Finance Minister said, it could lead to reduction in interest rates.

As far as inflow from demonetisation is concerned, he said it would come from many sources including higher tax penalty to be levied on unaccounted money.