NITI Aayog Vice Chariman says demonetisation slashed cash transactions

A day after the RBI said that 99.3 percent of the demonetized currency has returned to the banks, NITI Aayog Vice Chairman Rajiv Kumar on Thursday said the objective of the note ban exercise was not to have a large number of unreturned Rs 500 and 1,000 notes but to encourage digital payments and reduce cash transactions.

"Who said the aim of demonetization was to get back less money? Demonetisation has impacted the markets and market psychology," Kumar said.

"How many cash transactions used to take place before demonetization, and what is the position now?" he said.

The government has maintained that the physical currency in the system at present is much less than what it would have been if demonetization had not taken place.

Economic Affairs Secretary Subhash Chandra Garg had said on Wednesday that had the physical currency grown at the same rate at which it was growing before demonetization, there would have been some three to four lakh crore rupees more in the system at present.

The RBI's annual report 2017-18 said that on completion of the process of verification of the scrapped Rs 500 and Rs 1,000 notes, it was found that the total value of the demonetized currency returned to the banks stood at Rs 15.3 lakh crore, which amounted to 99.3 percent of the Rs 15.4 lakh crore worth of such notes in circulation on November 8, 2016.

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