The Reserve Bank of India (RBI) is being asked to reimburse the government’s currency paper printing presses for the loss and wastage the presses incurred because of the note demonetisation of November 8, 2016.
According to The Indian Express, the compensation demanded is to the tune of Rs 577 crore.
The Rs 577 crore figure is due to the huge consignments of currency note paper used for the Rs 1,000 and Rs 500 denominations. These consignments were both indigenous and imported.
Besides this, the cost of wasted ink and other materials used specifically for these denominations as well as costs for additional factors like transportation and packing have also been taken into account.
Top government officials and officials in the currency paper printing establishment told The Indian Express that the matter was under discussion and since the printing presses were captive units (they do no commercial work), the losses they incurred on account of demonetisation would surely have to be offset.
The notes that were demonetised on November 8, 2016, or the specified bank notes (SBNs), were worth Rs 15.45 lakh crore. This was the majority of the overall Rs 17.97 lakh crore that was in circulation during that period – meaning, 86% of India’s currency was rendered valueless overnight on November 8.
Prime Minister Narendra Modi, in his speech on November 8, said that the move was to curb black money, counterfeit currency and terror funding.
However, in the chaotic weeks following the announcement, with mounting deaths and outrage over poor handling by the government, the rhetoric was abruptly shifted to focus on digitisation of the economy and increasing the tax base.
The RBI was widely criticised for not disclosing information on how much black money demonetisation was able to neutralise.
Last week, it released its annual report which seemed to vindicate a lot of demonetisation’s criticisms. The RBI annual report revealed, among other things, that almost all of the demonetised currency has found its way back to the central bank. The report also concludes that only 0.0007% of Rs 1,000 notes and 0.002% of old Rs 500 notes were found to be fake. (Overview of the RBI’s report can be read here.)
There are four currency note printing presses in India. There are the two currency presses of the Public Sector Security Printing & Minting Corporation of India Ltd (SPMCIL), which operates printing presses in Nashik and Dewas, and the two of the Bharatiya Reserve Bank Note Mudran Pvt Ltd (BRBNMPL), which is an RBI subsidiary and operates printing presses at Mysore and Salboni, West Bengal.