RBI Clarifies After RTI Reveals Conflicting Currency Data
Data on currency in circulation since 8 November differs from the data provided in response to an RTI query.
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Currency data provided by the Reserve Bank of India (RBI) in response to a Right to Information (RTI) query has sparked off another round of head-scratching by analysts, prompting the central bank to step in with an explanation.
Independent journalist and RTI activist Anil Galgali posted a few basic questions to the RBI. Among them was a query seeking details of the inventory of currency notes across all denominations available with the RBI on 8 November. Galgali also asked for data on new currency notes printed at the time.
Galgali shared a copy of the response given to his RTI query with BloombergQuint.
It was the response to Galgali’s first question that raised eyebrows. According to the data on official currency in circulation, referred to frequently since the government’s demonetisation decision, Rs 17.97 lakh crore was in circulation as of 4 November.
The data, provided in response to the RTI query, suggests that the number was much higher at Rs 23.9 lakh crore.
The RBI, however, clarified that the difference between the two data points is the value of notes held by the RBI and its currency chests. This is money that had not yet been put into circulation and hence not part of the currency in circulation data.
The RBI noted that this stock (of about Rs 6 lakh crore) is not a part of the central bank’s liabilities until it is actually ‘issued’ to the public. As such, there would be no corresponding assets against those notes.
The data provided as part of the RTI query would also not be relevant while judging the amount of scrapped currency that comes back to the system. That would continue to be measured against the Rs 15.45 lakh crore in currency that was withdrawn, said the RBI. At last count, about Rs 13 lakh crore of the scrapped currency has been deposited in the banking sector.
There is, however, no explanation as to why this data is not published anywhere in the RBI’s bulletins or its annual report. The central bank has also not spoken of this stock of notes in any comments or statements made post the demonetisation decision.
How Much New Currency Did RBI Have?
The response to Galgali’s RTI query also states that the RBI had printed Rs 4.94 lakh crore in new Rs 2,000 notes before the demonetisation decision was announced. However, no new notes of Rs 500 denomination had been printed.
The banking system has been faced with a shortage of new Rs 500 notes. The RBI and the government have both assured that currency printing presses are now focusing on bringing more of these into circulation, which, in turn, would make the Rs 2,000 notes more acceptable for transactions.
Overall, Rs 5 lakh crore in new notes have been put into circulation since 8 November, Attorney General Mukul Rohatgi told the Supreme Court last Thursday.
(Originally published in BloombergQuint)