Lok Sabha Question No. 1336 (UNSTARRED), answered on 2017-12-22
Subject: Impact of Demonetisation
Ministry: FINANCE
Asked by: ARPITA GHOSH, VINCENT H PALA, SANTOKH SINGH CHAUDHARY, YERRAM VENKATA SUBBAREDDY

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS LOK SABHA

UNSTARRED QUESTION NO. 1336

TO BE ANSWERED ON 22 nd  DECEMBER, 2017/1 ST  PAUSHA SAKA, 1939

## Impact of Demonetisation

1336. SHRIMATI ARPITA GHOSH: SHRI VINCENT H. PALA: SHRI SANTOKH SINGH CHAUDHARY: SHRI Y.V. SUBBA REDDY:

## QUESTION

## Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has assessed the impact of demonetisation on fiscal and economic terms;
- (b) if so, the details thereof, sectorwise;
- (c) whether as per the Mid Term Economic Survey demonetisation has resulted more than half-a-percent of GDP and if so, the details thereof;
- (d) whether  the  Government  has  examined  the  probability  of  duplicating  and  counterfeiting  the  new rupees 500 and 2000 notes and if so, the details thereof; and
- (e) the extent by which digital payments have given an impetus since the declaration of demonetisation along with the increase/decrease in the use of physical notes in transactions, State/UT-wise?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI P. RADHAKRISHNAN)

(a) to (c): The overall economic growth of the Indian economy is dependent on many factors that, interalia, include the rate of capital formation and savings, utilization of technology, availability of infrastructure, efficiency of resource  allocation, quality of  institutions,  governance  and  the  policy framework  in  place,  money  supply  and  degree  of  financial  development.  It  is  difficult  to  pin-point  the impact of demonetization on the economy via its impact on the aforesaid factors.

Economic Survey 2016-17, presented to the Parliament in January 2017, mentioned that demonetisation had  temporarily  affected  real  GDP  and  part  of  economic  activity.  The  Real  GDP  Growth  has  shown  a revival in 2017-18: Q2 registering a growth rate of 6.3 per cent from a growth rate of 5.7 per cent in 201718: Q1.

The Economic  Survey  2016-17 Volume  2, published in August 2017,  made  an assessment of demonetization across some key sectors and found that the growth of taxpayers post-demonetization was significantly higher than in the previous year. It was also found that there was a deceleration of house price inflation post demonetization and a substantial increase in digitalization.

(d) There are incidents of seizure of counterfeit notes of ₹ 500 and ₹ 2000 after demonetisation. However as per available inputs no high quality counterfeit new currency notes have been seized by any agency so far.

Incorporating  new  security  features/designs  in  the  banknotes  to  stay  ahead  of  the  counterfeiters  is  an ongoing  process.  The  security  features  are  strengthened  from  time  to  time  to  enhance  the  counterfeit resistance of the notes.

(e): There is a significant increase in average volume and value of payments made through cards in postdemonetisation period. Further, the average payment value per transaction for cards has declined, implying that  cards  are  being  used  for  lower  value  transactions  in  recent  period.  Similar  results  are  observed  for transactions  done  using  PPI  as  well.  Mobile  banking  payments  have  also  increased  in  recent  period. Growth is observed for IMPS as well in post-demonetisation period. To promote digital payments several initiatives  including  monetary  incentive  schemes  as Promotional  Scheme  of BHIM Aadhaar, BHIM-

Cashback  Scheme  for  Merchant,  BHIM-Referral  Bonus  Scheme  for  Individuals,  Digital  Jagrit, DigiShala, have been launched.

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