Demonetisation of high value currency in November 2016 helped reduce cash transaction and encouraged digital payments, Niti Aayog Vice-Chairman Rajiv Kumar said on Thursday.
As per the RBI Annual Report released yesterday, 99.3 per cent of the demonetised Rs 500 and Rs 1,000 notes were returned to the banking system.
At the time of demonetisation, which among other things aimed at checking black money, about 86-87 per cent of the total currency in circulation was in the form of Rs 500 and Rs 1,000 notes.
“Who said the aim of demonetisation was to get back less money? Demonetisation has impacted the markets and market psychology. How much transaction used to take place in cash (before the note ban), and what is the position now?”, Kumar said replying to media queries on the sidelines of an event.
To another question, he said the government was committed to fiscal discipline and pointed out that the Prime Minister resisted the pressure to cut down excise duty on fuel while the oil prices were on rise.
He further said that retail inflation, which includes fuel and food, is lower than core inflation.
“So inflationary impact of an oil price rise, or that of minor exchange rate decline is not that high, because there can be a supply response to that. Inflation is well under control. We are constantly on vigil on these issue,” he added.
On November 8, 2016, Prime Minister Narendra Modi had announced the demonetisation of high-value currency notes.
Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, when the note ban was announced, currency worth Rs 15.31 lakh crore has returned to the banking system.