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By Shri Kidambi

The Saga of either Ignorant arrogance or Out Right Fraud

Absolute true Facts of Number under RTI Give the Game Away


The original objective of demonetization was to create transparency in other wise well-functioning not visible opaque black economy of India. But unfortunately the whole of the saga as explained in the article 2016 Demonetization of India -A Cure or Boon? is going to create more number of black money hoarders and the value of black money will be doubled. Rather than making honest individuals to be compliant with law, it pushes them to be more dishonest thus they could be selectively demonized.

The RBI, while sharing regular updates on the amount that came in during the period between November 9 and December 31, went into silent mode after that and did not share any number on the total volume of notes that have come back and how much didn’t.

Even parliamentary committees were unable to get the RBI to share that information and it was only met with an answer that counting was still in progress.

However in its annual report the RBI published a table that gives the currency in circulation at the end of March 2017. From this one has to presume that those notes didn’t come back to RBI, that is about 89 million pieces of the ₹1,000 note (value of ₹8,900 crore). To put that in perspective, in the previous year, 6,326 million pieces of ₹1,000 notes valued at ₹6,32,600 crore were in circulation. Similarly, in the case fof ₹500 note about 5,852 million pieces worth ₹2,94,100 crore were in circulation at the end of March 2017.

*Source: RBI Annual Report 2016-2017

The Reserve Bank of India (RBI) in its annual report also mentions that the central bank has spent a whopping ₹7,965 crore to print new currency notes from July 2016 to June 2017, a jump of 133% against ₹3,421 crore in the same period of the previous year, in the wake of demonetization of ₹ 500 and ₹ 1,000 notes

As a result of the high cost incurred for printing notes as part of remonetization of currency and provisions, the total expenditure of the Reserve Bank increased by 107.84% from ₹ 14,990 crore in 2015-16 to ₹ 31,155 crore in 2016-17, according to the RBI’s Annual Report.

The total supply of notes was 3.5% higher than the indent placed with the printing presses for 2016-17, while the indent itself was higher by around 17.4% than that of the previous year, the RBI said.

*Source: RBI Annual Report 2016-2017

The total supply of notes was 3.5% higher than the indent placed with the printing presses for 2016-17, while the indent itself was higher by around 17.4% than that of the previous year, the RBI said.

Supply of notes during the year at 29,043 million pieces was 37% higher than the total supply during previous year (21,195 million pieces).Supply of higher denomination notes during 2016-17 was 13,702 million pieces as against 5,268 million pieces supplied in 2015-16, higher by 160%, the RBI said.

*Source: RBI Annual Report 2016-2017

According to the reply to an RTI application by RTI activist Anil Galgali, RBI Deputy General Manager P. Wilson said in a written submission that the ‘selling price’ is ₹3,090 per thousand pieces of ₹500 denomination new currency notes, or ₹3.09 per note for the current year, 2016-2017.

The BRBNMPL said it did not have information pertaining to Galgali’s RTI query on the ₹1,000 currency notes.

The RBI buys the currency notes from the Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL), a wholly owned subsidiary of the Reserve Bank, which is playing a crucial role in the indigenization of security features of banknotes in India.

The activist had also sought information regarding the details of the quantity ordered to print its total amount contract, the amount released and amount pending. But the BRBNMPL refused to reveal the information as it falls under the ambit of section 8(1) (a) of the RTI, 2005. It is surprising that RBI still hasn’t revealed proper data about the currency notes

A RTI response to another application filed by Subhash Chandra Agarwal on the cost of printing notes stated that The Reserve Bank of India (RBI) owned Bhartiya Reserve Bank Note Mudran Private Limited (BRBNMPL) sells the notes of ₹10 and ₹20 at a cost of 70 paise and 95 paise to the authorities, while the units of central government owned Security Printing & Minting Corporation of India Limited (SPMCIL) sells these notes at a much higher price at ₹1.22 and ₹1.216.



Statement of costing of Bank Notes unit wise/denomination wise for the F.Y. 2014-15(RTI response to Subhash Chandra Agarwal):

BNP, Dewas CNP, Nashik
1 0.785
10 1.220 0.70
20 1.216 0.95
50 0.864 1.09
100 1.516 1.544 1.43
500 2.970 3.09
1000 3.732 3.54

The RTI also sought information regarding the steps taken to reduce the cost of printing of notes. The SPMCIL said that its corporate office doesn’t have the information and directed the query to Currency Note Press (CNP), Nashik and the Bank Note Press (BNP), Dewas to reply to the petitioner. The BRBNMPL, on the hand, denied information stating “the cost of printing bank notes cannot be provided since it is considered as exempted information that falls under the ambit of section 8(1)(a) of the Right to Information Act, 2005.”

The cost of printing notes is the actual cost of paper, ink, security features etc that goes to print one piece of currency of any denomination. This has nothing to do with the face value of the note printed. For example it may cost ₹3.59 paise to print say ₹ 2000 note but that note exchanges in market for its face value of ₹ 2000. This face value comes from the strength of GDP (both white and black economies at current time and white and black assets within the economies at any given time) that backs the currency issue in any given country.

The table below indicates the cost of printing various currency denominations in India.

Table 1. Cost of Printing Notes
Note Value Cost of Printing Face Value In Circulation
1 1.14 1
5 0.48 5
10 0.96 10
20 1.5 20
50 1.81 50
100 1.79 100
500 2.5 Old 500
1000 3.17 Old 1000
500 3.09 New 500
2000 3.54 New 2000

India dated March 16, 2017:

The government on Wednesday revealed that it costs between ₹ 2.87 to ₹ 3.09 to print the new ₹ 500 note and between ₹ 3.54 to ₹ 3.77 for a ₹ 2,000 note.

The figures were revealed by Minister of State for Finance Arjun Ram Meghwal in a written reply in Rajya Sabha during Parliament’s ongoing budget session.

  • The total value of banned ₹ 500 and ₹ 1,000 notes was ₹ 15.44 lakh crore on November 8, a day before the banknotes ceased to be legal tender.
  • As of February 24, 2017, the currency in circulation in India was ₹ 11.64 lakh crore.
  • Post demonetization, RBI received ₹ 12.44 lakh crore in the form of the old ₹ 500 and ₹ 1,000 notes, as of December 10, 2016.

Now if we observe the figures provided by various authorities regarding the purpose and the volume of black money to be nullified in the current round of demonetization, then none of them match from what they are saying and from what they are doing. Former Finance Minister also commented on these discrepancies in his own sense of humor but painfully leaving the readers to read between the lines the fraud committed.

Reserve Bank of India publication on assessment and impact of demonetization published in 2017 stated out of a total of ₹ 15,44,000 Crores (Fifteen Lakh Forty Four Thousand Crores) of currency value (not individual pieces of notes) that were cancelled, ₹ 16000 crores never came back in to the system.

Out of 632.6 crores of pieces of ₹ 1000 notes (whose value is ₹. 6,32,60,00,000 Crores) close to 8.9 crore pieces (whose value is ₹ 89,00,00,00,000) were never returned to the banking system indicating they were exchanged outside banking channels or donated to charity. Here RBI is talking about not the value of currency but the individual ₹ 1000 rupee notes printed.

Now If we add the above two statements of RBI then two issues become very clear and many questions arise. We go through all of them.

First of all RBI is saying that the black money in India is confined only to the higher denomination currency value printed and was estimated to be one fifth of total such currency printed by our Prime Minister to be at ₹ 3 lakh crores.

RBI also stated that they know for sure that they are going to cancel ₹ 15.44 lakh crore worth of currency value in India and that among this value, there are 632.6 crore pieces of ₹ 1000 rupees in circulation and that makes the total value of ₹ 1000 rupee currency to be at ₹ 6,32,60,00,000 crores and the rest of the balance of cancelled currency value belong to ₹ 500 rupee notes. So the total value of currency cancelled in ₹ 500 denomination was close to ₹ 9,11,400 lakh crores, and close to 1822 crore pieces of ₹ 500 rupee notes were cancelled.

Out of this, ₹ 16000 crores currency value or 1% of total value cancelled was not returned to the system according to RBI. But the next statement of RBI that 8.9 crore pieces of ₹ 1000 rupee notes have not returned to the system, means the currency value in ₹ 1000 denomination is close to ₹ 89,00,00,00,000 crores which has not returned to the system. The rest ₹ 64,40,00,00,000 that were not returned to the system are of ₹ 500 denomination. Until now the statements of RBI are mathematically fitting what they are saying.

The second important fact is an amazing admission by the RBI that in the last three years alone the soiled notes returned belonging to  ₹ 500 and ₹ 1000 denomination amounts to a whopping total of 3,41,000 crores almost equaling to one fourth of the total currency value that has been cancelled. (Refer to the table on soiled notes from the annual report of RBI mentioned above)Now the question is where these notes went. Were they destroyed and replaced? Or, were they recirculated among the political parties in power and then replaced? Is this the figure that our Prime Minister is referring to as to the total amount of black money in the economy? What happened to the soiled notes of the previous years?

If we take the last twenty five years of liberalization and go by the RBI estimates, once in twelve years the total soiled notes returned will be equal to the total value of the currency in circulation and if the soiled notes are not destroyed and recirculated then in the last twenty five years we have created a black money equivalent of two times the total of the cancelled currency in last November totaling close to ₹ 30 lakh crores of black money. Is this the reason why the RBI spent 21000 crores in printing new 500 and ₹ 2000 denominations whereas, to print actual currencies the cost will be only one fourth of it as explained in the tables below.

Indeed an excellent mathematical calculation was compiled by RBI and their consultants and it looks just like the first project work compiled by Grade 10 economics students who sometimes copy  from each other to a point of son of or daughter of from the original version. This mathematical compilation exactly fit the growth slowdown in the GDP as predicted by former PM and FM to be at roughly 2% of the white economic activity. Did these figures of RBI compiled after GDP calculations came in or before is a big question but we leave that to later time.

Now before we go in to further analysis of other aspects of the above information one fact was very glaring, The RBI need to replace the above ₹ 15.44 lakh crore cancelled currencies ASAP so that poor Indians need not be dying in lines for withdrawing their monies. They said it takes some six months to do that feat.

Table No. 2. The Cancelled Notes their Number and Value
Currency Denomination No of Pieces In circulation Currency Value Cancelled (R)
V U R = UV
1000 6326000000 6326000000000
500 18228000000 9114000000000
Total Currency Value Cancelled 15440000000000


Table No. 3. Supposed Replacement cost of above cancelled Currency and no.of units replaced
Currency Printed Cost of one Unit Printing No of Units to Print Total Cost of Printing Value of Currencies Printed
500 3.09 18228000000 56324520000 9114000000000
2000 3.54 3163000000 11197020000 6326000000000
Total Cost of Printing and Currency Replaced 67521540000 15440000000000


Table No. 4. The Actual Currency Notes Printed and their Value as per RBI Report
Currency Printed Cost of one Unit Printing Total Spent to Print Money Total Units of Currency Printed The total Value created
In Rupees In Dollars
v r R u = R/r RV = u x v 1$ = Rs 60
500 3.09 105,000,000,000 33,980,582,524 16,990,291,262,136 283,171,521,036
2000 3.59 105,000,000,000 29,247,910,864 58,495,821,727,020 974,930,362,117
Grand Total of New Currency Printed 210,000,000,000 63,228,493,388 75,486,112,989,155 1,258,101,883,153


Table No. 5.Cancelled Notes versus Replaced Notes Number and Value
Replacement Value 9114000000000 6326000000000 15440000000000
Supposed Replacement Cost of Printing 56324520000 11197020000 67521540000
Unit Cost 3.09 3.54 Actual Cost of PrintingPrinting as per RBI Data 105,000,000,000 105,000,000,000 210,000,000,000
Units to Print 18228000000 3163000000 Value Printed 16990291262136 59322033898305 76312325160441
Supposed to be Replaced With 500 2000 Units Printed 33980582524 29661016949
Value 9114000000000 6326000000000 15440000000000 Units cost to print 3.09 3.54
Cancelled 500 1000 Denomination 500 2000 Grand Total of Replace Value


From the table 1 above the cost of printing the currencies above and from the data given by RBI as to how many individual pieces of notes of ₹ 1000 and ₹ 500 were cancelled it will be easy to estimate how much the printing costs of such replacement will be. For sure we know that all ₹ 500 rupees that were cancelled were replaced or has to be replaced. And as RBI introduced ₹ 2000 rupee note instead of ₹ 1000 rupee note cancelled, RBI need to print exactly half of the total 1000 rupee notes in circulation. Table No. 2 refers to the total value of cancelled notes and their individual numbers that were cancelled.  Table No. 3 explains the ‘supposed actual cost’ of replacement printing of such notes that were cancelled by RBI. Table N. 4 explains the ‘Actual Cost incurred by RBI in printing’ and the ‘Value of Notes’ RBI printed. Table No. 5 depicts the discrepancies between what RBI said they cancelled and What RBI said they Printed to replace such cancelled notes.

From the above figures it is very clear that the cost of printing notes that were published by RBI to be at ₹ 21,000 crores over which the ex-Finance Minister tweeted indicate that the RBI printed 5 times the value of the currency they cancelled. An amazing back up to keep so that they can distribute that when needed. This fact alone indicate that there was much explanation to be given to the people India unless the authorities think that Indians does not deserve to know the truth or cannot handle political truths.

The first question is, was there supervision on RBI as to how much they are cancelling and replacing? More fundamental question is do with does RBI know how much of currency of higher denomination was printed and how much came back as soiled currencies to replace and if such soiled currencies were replaced or not or released in to system to circulate? Is it to replace these soiled currency black money that was stashed with all political parties that RBI printed 5 times the currency worth they cancelled? If RBI know that 5 times more currency was circulating in the economy than what existed with public do they have a data on the economic impact of such currency in terms of multiplier effects on both black and white economies? Is it the reason why they printed and replaced all that black money first while poor Indians dying in Q lines to with draw ₹ 4000 rupees? Was this the reason why money exchangers across the country bought at 40% discount all black money and exchanged the same with higher denomination currencies printed and converted all that in to dollars pounds and gold? Was this the reason why we after cancelling higher denominations to stop black money, re introduced the same and much higher denomination currency under the pretext of preventing black money formation where as the main purpose is to create more black money with fresh currency and transfer the same to safe heavens, as tweeted by ex-Finance Minister ?

The Saga of Soiled/torn notes:

2014-15 2015-16 2016-17
Millions Value Value Value Value
Denomination Pieces Billions Pieces Billions Pieces Billions Billions
1000 663 663000 625 625000 1514 1514000 2802000
500 2847 1423500 2800 1400000 3506 1753000 4576500
100 5173 517300 5169 516900 2586 258600 1292800
50 1271 63550 1349 67450 778 38900 169900
20 801 16020 849 16980 546 10920 43920
10 4388 43880 5530 55300 3540 35400 134580
TOTAL 2727250 2681630 3610820 9019700

Looking at the chart definitely few of the following points must have been raised by activists or Ace B Schools, or Million dollar remuneration financial experts or ever breaking news corporate fake media.

  1. It is amazing that in three years  90 Lakh Crores of Rupees ‘came back to RBI for disposal’.
  2. The total value of currency cancelled during the current demonetization was  15.44 lakh crores whereas   6 Lakh crores worth of soiled notes came back to RBI in the year 2016-17.
  3. Coming back to RBI for disposal means these currencies are not available for common public as they are soiled/torn notes.
  4. When such huge quantities were sucked for disposal there was no panic in the public, no long lines.
  5. When 1000 and  500 notes were cancelled, GDP shrinked by 2% but when double the quantity of notes were vacuumed for disposal no shrinkage of economy.
  6. It is also surprising that to replace cancelled ₹ 1000 and  ₹ 500 it took 6 months of nonstop printing but assuming that RBI ‘replaced’ the soiled notes then it must be a remarkable feat that these were instantly replaced without public outrage.
  7. The only troubling question is that there is no printing cost associated with these re printing or re issuing of spoiled/ vacuumed notes in the previous years.
  8. Of course RBI can say that they waited for three years to reissue soiled notes in one shot. As we can clearly see the current cost of printing ₹ 500 (New) and ₹ 2000 does not match with the volume of cancelled notes or 4 times the actual cost required to print demonetized notes and projected by RBI at ₹ 21000 crores. Then, is RBI telling us they issued only ₹ 500 new and ₹ 2000 notes instead of various denominations of spoiled notes?
  9. Indeed a very good step in saving lot of paper and few hundred trees as part of environmental responsibility of RBI but, that means for ₹ 15 Lakh crore cancelled, RBI introduced  Rupees 63 Lakh crores of currency and that matches with the estimates of cost of  ₹ 21000 crores printing cost of the  ₹ 500 and ₹ 2000 notes. If RBI just wants to replace the cancelled currencies, the replacement costs of the cancelled currencies could have been 6752 thousand crores (refer Table No 3, 4 and 5)
  10. Then the question is where the extra ₹ 500 and ₹ 2000 printed currency go? To various black money holders who exchanged the black money at 30% to 40 % discount?
  11. Were the soiled notes really soiled or they are in fact black money termed as soiled and reissued with new denomination to legitimize existing black money and transfer it out side.
  12. If in past three years these many soiled notes came back then what about the soiled notes since liberalization? Were they reissued by previous governments? Was this termed by Ex Finance minister as white washing black money?
  13. Following the Ex-Prime Minister Deva Gowda’s squabble with a prominent religious head of Karnataka for his share of soiled notes does that mean the actual black money component in India is created by political parties in power and this was legitimized by current government under demonetization ?
  14. And is that the reason why no political party of all colors, no economist or financial expert of all hues never raised any basic questions on the current round of demonetization?
  15. Is that the reason why most fire brand politicians, Chartered accountants and economists silent on this issue as it is done after all for the future survival of their sponsored political parties?



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