Rs290m spent on using Indian Air Force to ferry new notes after demonetisation

The RBI had said that as much as 99% of the junked Rs 500 and Rs 1,000 notes had returned to the banking system.

Source: DNA India

More than Rs 29.41 crore (Rs290 million) was spent on using the Indian Air Force’s (IAF) ultra-modern transport aircraft – the C-17 and the C-130J Super Hercules — to ferry the newly-issued Rs 2,000 and Rs 500 banknotes after the Modi government’s demonetisation decision, an RTI reply has revealed.

The move to scrap the old Rs 500 and Rs 1,000 banknotes was announced by Prime Minister Narendra Modi on November 8, 2016, and saw 86 per cent of currency being withdrawn from circulation, needing an urgent operation to replenish it with the new Rs 2,000 and Rs 500 banknotes issued after demonetisation.

According to the response provided by the IAF, its frontline transport aircraft, the C-17 and the C-130J Super Hercules, undertook 91 sorties to transport bundles of currency from security printing presses and mints to various destinations across the country.

As on November 8, 2016, there were 1,716.5 crore pieces of Rs 500 and 685.8 crore pieces of Rs 1,000 notes in circulation, totalling Rs 15.44 lakh crore, about 86 per cent of the total currency in circulation, according to Reserve Bank of India (RBI) and government data.

In its RTI response to Commodore Lokesh Batra (retd), the IAF said it has billed the government-owned Security Printing and Minting Corporation of India and the Bharatiya Reserve Bank Note Mudran Private Ltd to the tune of Rs 29.41 crore for its services.

“I am of the opinion that the government should have avoided using defence assets and instead could have easily requisitioned the services of civil transport aircraft,” Batra told PTI.

This situation could have been avoided, had the government fully prepared itself before making the announcement to demonetise currency notes of Rs 1,000 and Rs 500 on November 8, 2016, he said.

Post-demonetisation, the RBI had spent Rs 7,965 crore in 2016-17 on printing the new Rs 500 and Rs 2,000 notes, and those of other denomination, more than double the Rs 3,421 crore it had spent in the previous year.

The demonetisation decision was hailed as a step that would curb black money, corruption and check counterfeit currency, but the RBI, in its annual report for 2017, had said just 7.1 pieces of Rs 500 note per million in circulation and 19.1 pieces of Rs 1,000 notes per million in circulation were found to be fake in its sample survey.

The RBI had said that as much as 99 per cent of the junked Rs 500 and Rs 1,000 notes had returned to the banking system, which had prompted the Opposition to question the efficacy of the government’s unprecedented note ban decision to curb black money and corruption.

Following the note ban, old notes were allowed to be deposited in banks, with unusual deposits coming under the Income Tax department’s scrutiny.

A collateral damage as a result of rise in printing and other cost was dividend RBI pays to the government.

The RBI had said its income for 2016-17 decreased by 23.56 per cent while expenditure jumped 107.84 per cent.

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