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Banned notes: What FM revealed is important, what he hides is crucial

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New Delhi, Feb 3 (IANS) Finance Minister Arun Jaitley, during his budget speech on Wednesday, provided a glimpse into the number of demonetised notes deposited between November 8 and December 30, 2016, without giving the full picture.

Is it because the full picture is fraught with difficulties?

Jaitley said deposits of over Rs 2 lakh and up to Rs 80 lakh in banned currency notes were made in 1.09 crore accounts, at an average of Rs 5.03 lakh per account.

He further said deposits of over Rs 80 lakh were made in 1.48 lakh accounts, at an average of Rs. 3.31 crore per account.

Which means a mere 1.1 crore accounts saw deposits worth Rs 10.38 lakh crore — more than two-thirds of the Rs 15.44 lakh crore worth of Rs 500 and Rs 1,000 that were declared illegal on November 8.

The number of individuals, firms and companies who would have deposited this amount would be lower, since many have multiple accounts.

Given that India has over 143.98 crore bank accounts (RBI figure for March 2015), two-thirds of the deposits were made in less than one per cent of the accounts. Further, such high-end depositors amount to only about one-fifth of the 5.1 crore income tax returns filed in 2015-16, including 3.7 crore individuals. The number of individuals who actually paid tax was 2.73 crore.

Now, if you remove the high-average deposit accounts and take out regional rural banks, which were not allowed to accept deposits in the early stages, there are still 124.7 crore accounts into which the demonetised money could be deposited.

(There were very few Jan Dhan accounts in March 2015. In any case, the Finance Ministry has announced that a net amount of Rs 23,391 crore was deposited in 26.68 crore Jan Dhan accounts between November 8 and December 30.)

So what would be the average deposit needed in the rest of the accounts to bring the amount returned to Rs 15.44 crore that was banned on November 8, 2016?

That, believe it or not, is only Rs 3,870.

Just as a reference point, in March 2015, for which the numbers are available, the average deposit in 124.7 crore accounts would amount to Rs 61,075 (excluding the Rs 10.38 lakh crore deposited in 1.1 crore accounts).

If the average deposit of banned notes was even marginally higher at Rs 4,000, it would overshoot the amount of such notes in circulation on November 8.

Would that be the reason why the Reserve Bank of India has not given any figure for the demonetised notes deposited in the banking system? Even a month-and-a-half after its last statement on December 21 about such deposits, the RBI is still struggling to announce the figures.

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