Mumbai: The sudden withdrawal of Old High Denomination (OHD) currency notes from the banking system will throw Rs 14 lakh crore worth of cash to the bin as Rs 500 and Rs 1,000 currency notes account for 86 per cent of total currency in circulation in country.
The low denomination currency notes constitute the rest 14 per cent of total currency in circulation in the banking system.
Of these, Rs 500 currency notes amount to approximately Rs 8 lakh crore or $120 billion and Rs 1,000 currency notes are valued at over Rs 6 lakh crore or $97 billion.
A report published in the Hindustan Times cited a similar step taken by the Morarji Desai government back in 1978. The report said only Rs 125 crore worth cash could come into the banking system and remaining Rs 20 crore stacked up by tax evaders as black money was lost.
The report also cites that the amount stacked up as black money in 2016 could be astronomical given the number of years that have passed and the scale of appreciation the Indian currency has undergone.
Indian economy will lose Rs 2 lakh crore worh of cash in black money in 2016’s demonetisation exercise, the report said.
On November 8, Prime Minister Narendra Modi in a televised address to the nation announced his government was withdrawing Rs 500 and Rs 1,000 currency notes as part of an attempt to curb black money and remove fake notes from the market.