Move to scrap the old Rs500 and Rs1,000 notes saw 86% of currency being sucked out of the system

New Delhi: Over Rs294 million (Dh15.69 million) was spent on using the Indian Air Forces ultra-modern transport aircraft — the C-17 and the C-130J Super Hercules — to ferry the newly-issued Rs2,000 and Rs500 currency notes post-demonetisation, according to a Right To Information reply.

The move to scrap the old Rs500 and Rs1,000 notes was announced by Prime Minister Narendra Modi on November 8, 2016, and saw 86 per cent of currency being sucked out of the system, needing an urgent operation to replenish it with the new Rs2,000 and Rs500 notes issued after demonetisation.

According to the response provided by the IAF, its front line transport aircraft, the C-17 and the C-130J Super Hercules, undertook 91 sorties to transport bundles of currency from security printing presses and mints to various destinations across the country after the Rs1,000 and the Rs500 notes were demonetised by the government in a sudden move on November 8, 2016.

As on November 8, 2016, there were 17.16 million pieces of Rs500 and 685.8 crore pieces of Rs1,000 notes in circulation, totalling Rs15.44 trillion, about 86 per cent of the total currency in circulation, according to RBI and government data.

In its RTI response to Commodore Lokesh Batra (retd), the IAF said it has billed the government-owned Security Printing and Minting Corporation of India and the Bharatiya Reserve Bank Note Mudran Private Ltd to the tune of Rs294 million for its services.

“I am of the opinion that the government should have avoided using defence assets and instead could have easily requisitioned the services of civil transport aircraft,” Batra told journalists.

This situation could have been avoided, had the government fully prepared itself before making the announcement to demonetise currency notes of Rs1,000 and Rs500 on November 8, 2016, he said.

Post-demonetisation, the RBI had spent Rs79.65 million in 2016-17 on printing the new Rs500 and Rs2,000 notes, and those of other denomination, more than double the Rs34.21 million it had spent in the previous year.

The demonetisation was hailed as a step that would curb black money, corruption and check counterfeit currency, but the RBI, in its annual report for 2017, had said just 7.1 pieces of Rs500 note per million in circulation and 19.1 pieces of Rs1,000 notes per million in circulation were found to be fake in its sample survey.

The Bankers Bank had said that as much as 99 per cent of the junked Rs500 and Rs1,000 notes had returned to the banking system, which had prompted the opposition to question the efficacy of the governments unprecedented note ban decision to curb black money and corruption.

Following the note ban, old notes were allowed to be deposited in banks, with unusual deposits coming under the Income Tax departments scrutiny.

A collateral damage as a result of rise in printing and other cost was dividend RBI pays 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.

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