There is a famous couplet by Iqbal that, if loosely translated, goes like this: There must be something about us that ensures we are never destroyed or decimated even when the world has been our enemy for ages. Now, apply that to the current war on illegal cash by the Narendra Modi government: It seems there is really something about Indian cash that ensures its survival.
Note the figures.
On 8 November, when the prime minister announced notes of higher denomination would be outlawed with immediate effect, currency notes worth nearly Rs 14.5 lakh crore became illegal unless deposited in banks or used for select services.
When the government outlawed the notes, it was said that the so-called demonetisation would help achieve three objectives: a) unearth black money stashed as cash, b) curtail funding of terror networks and c) destroy counterfeit currency.
It was also assumed a large part of the stashed cash would not be deposited and would be destroyed. Swept away by the euphoria, there were boisterous claims that money was being thrown into the Ganges or dumped in roadside bins.
But, on current evidence, it seems most of the money may actually end up getting legally tendered in banks, entering the system as white money. Whither kala dhan?
According to the RBI, since the 8 November announcement, currency notes worth Rs 8.11 lakh crore have been deposited in banks and Rs 33,498 crore (3 percent) have been exchanged. So, currency notes worth 60 percent of the total outlawed currency has already entered the system.
But, this does not mean 40 percent cash is still with people. Some portion of it was already with banks — in the form of cash held in ATM machines and in bank chests.
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