Since the statement by the deputy governor on December 13, which said Rs 12.44 lakh crore of the old Rs 500 and Rs 1000 notes (‘invalid notes’) had been received by the RBI or in currency chests, the RBI has put out no figures on the deposits of invalid notes the public has made with banks or the value of such notes returned to the RBI. The exact amount of fresh or valid banknotes (new Rs 500 and Rs 2,000 notes and notes of smaller denominations) the RBI has put into circulation after November 8 has also not been provided for a long time (and the one statement of December 7 that did was subsequently withdrawn from the RBI website). Only a rough idea of this can be got from the data on valid banknotes issued to public by banks since November 10. The last figure on this put out by the RBI was Rs 5.93 lakh crore, as the amount issued up to November 19.

It is, however, possible to get around the RBI’s miserly attitude towards releasing the data in its possession to get at a reasonably accurate picture of what has happened – and the picture itself provides a possible explanation for the RBI’s otherwise inexplicable increasing secretiveness. Let’s see how.

Figures for the currency in circulation (CIC), which is the sum of currency with the public and cash with banks, are given out weekly by the RBI through its routine releases of reserve money data. The last date before the demonetisation announcement for which this data was released was November 4, at which time the CIC was Rs 17.97 lakh crore. Even on November 11, after two days of the banking system working post the demonetisation announcement, the CIC was Rs 17.88 lakh crore. According to the latest figures issued by the RBI on December 28, the CIC stood at Rs 9.42 lakh crore on December 23, Rs 8.55 lakh crore less than the level on November 4. Indeed, the CIC has come down every week after the demonetisation announcement, which means that the net infusion of fresh currency by the RBI in each of these weeks has been less than the value of the old Rs 500 and Rs 1000 notes being returned to it over the same period.

The CIC on any date must be the sum of the values of the invalid and valid banknotes held by the public and banks. In other words, it would exclude the invalid notes that had been already returned to the RBI by that date but would include invalid notes deposited by the public with banks that have not yet been transferred to the RBI. We also know that the value of invalid notes in the CIC on November 8 was Rs 15.44 lakh crore. Let us now consider 21 alternative hypothetical scenarios of combinations of the two types of currency, invalid and valid, that are all consistent with their sum being Rs 9.42 lakh crore, the CIC on December 23. The first two columns in the table show these 21 combinations, in which the value of invalid notes ranges in increasing order between zero and Rs 2 lakh crore. Deducting the invalid notes’ value in each scenario from 15.44 lakh crore then give us the corresponding hypothetical value of invalid notes returned to the RBI (third column).

Taking the November 4 figure for the CIC to be also the figure on November 8, we can determine that the value of notes of denominations less than Rs 500 in the CIC on November 8 was Rs 2.53 lakh crore. Deducting this amount from the value of valid currency in each scenario would then give us the corresponding magnitudes of the hypothetical net infusion of fresh currency by the RBI between November 10 and December 23 (the fourth column). Comparing the figures in this column with the corresponding ones in the third column then gives us for each hypothetical scenario the corresponding proportion of fresh infusion of currency by the RBI to the value of invalid notes returned to it (the fifth column). It may be noted also that the difference between the magnitudes in the third and fourth column in each scenario is Rs 8.55 lakh crore, which as mentioned earlier is the figure for the post-demonetisation reduction in the CIC.

From the table, the following definitive or incontrovertible conclusions can be arrived at:

The infusion of fresh currency by the RBI up to December 23 could not have exceeded 45% the value of the invalid notes in circulation on November 8 – this is clear from the first scenario (where invalid notes in CIC was zero on December 23). The higher the figure of invalid notes still with the public or with banks at the end of December 23, the lower had to be the degree of replacement of the part received by the RBI with fresh currency. This can be seen by going down the rows in the table and comparing the movements of the figures in the first and last columns. In other words, there had to be an inverse relationship between two yardsticks for measuring the success and efficiency of the demonetisation exercise.

Given the figure of the value of fresh banknotes issued by banks to the public by December 19 as per the RBI’s press release (5.93 lakh crore), it would seem reasonable to also conclude that the actual position on December 23 would be closest to any one of the first ten hypothetical scenarios. This in turn would mean the following two things one week before the December 30 deadline:

That the amount of the old Rs 500 and Rs 1000 notes not returned to the RBI by December 23 was almost insignificant. At less than Rs 1 lakh crore, the value of such currency would be below 6.5% of the value of these notes in circulation on November 8. The value of such notes with the public would be even less, as some part would be held by banks. Any extinguishing of the RBI’s liability after March 21, 2017 resulting from the ordinance enacted on December 28, 2016 would therefore be of an inconsequential magnitude. We are still very far away from the full replacement of the cash withdrawn from circulation, with such replacement falling well short of the halfway mark by December 23. The severe cash shortage whose effect has been magnified by the fact that too large a proportion of it is in Rs 2,000 notes is therefore going to continue well beyond December 30.

From the government’s point of view, the hard reality thus seems to be that while the initial contention that a large amount of black money will not come back has fallen flat on its face, the promise that the cash shortage will ease by December 30 will remain unfulfilled by a wide margin. Is the reason for the RBI’s reluctance to put out the specific data because these would reveal this reality in black and white? Is the RBI waiting for the government to first work out what spin it wants to give to this otherwise deeply embarrassing picture, particularly given the severe pain that demonetisation has inflicted on the people? It’s hard to think of any other plausible explanation for the RBI’s reticence, because one thing that is certain is that it’s not possible that the RBI does not have the data or hasn’t been able to put it together. It’s silence on the figures, however, only serves to confirm what its own data indirectly reveals. This silence, which must be broken at some time, can therefore achieve very little other than damaging further the credibility of India’s central bank.

Surajit Mazumdar is a professor of economics at Jawaharlal Nehru University.