Of Indian banknotes cancelled last year, 99% are accounted for

ON NOVEMBER 8th 2016, Narendra Modi, India’s leading minister, shocked its 1.3bn individuals by using asserting that most banknotes would quickly become worthless. Indians then queued for weeks on conclusion to exchange or deposit their banned funds at banks. The consolation for the bad turned into that the grasping, tax-dodging rich would endure more, as they struggled to launder their suitcases crammed with money via 12 months-conclusion.

now not so. A record from the important bank, the Reserve financial institution of India (RBI), on August thirtieth means that of the 15.4trn rupees ($ 241bn) withdrawn—roughly 86% of all banknotes by price—15.3trn rupees, or ninety nine% of them, had been accounted for. both the “black money” in no way existed or, extra likely, the hoarders discovered a way of making it respectable.

Defenders of the scheme say it is in simple terms one plank of a much broader combat in opposition t casual financial pastime and corruption. Banks have loved an influx of cash. Digital funds are up (from a low base), as issuance of alternative notes has not caught up with the pre-withdrawal top (see chart).

officers once privately salivated in hope that probably a quarter of the cash, if now not more, would remain within the shadows. An edict to the imperative-financial institution governor to renege on his promise to “pay the bearer” of unreturned, demonetised notes fuelled social-media rumours that this might finance a one-off dividend to be dished out to all Indians.

definitely, not an awful lot more than one hundred rupees someone is accessible. The RBI has released the determine best now, claiming, improbably, that it obligatory to count number the cash in its tills. Its reputation for independence and competence has been dented. So has national satisfaction: demonetisation has pared growth and handed again to China India’s coveted crown of being world’s quickest-starting to be large economy.

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