By Kushagra Nayan Bajaj

GoI claims demonetisation to be a crackdown on black money and to stop counterfeiting of banknotes. But what if the motive was to checkmate all previous governments that may have arm-twisted RBI to print more currency than accounted for in its books?

GoI has valued India’s cash economy at Rs 14 lakh crore in Rs 500 and Rs 1,000 notes. What if RBI, on any government’s insistence, had printed, say, Rs 18 lakh crore? So, currency above Rs 14 lakh crore, while not on RBI’s books, remains official and has a serial number. This can’t be ‘fake’ or ‘black’ money.

Let’s call it ‘extra’ money. Over the years, this ‘extra money’ has been in circulation through the banking channels. Every government’s statistics report shows that 0.028 per cent — about Rs 400 crore — is fake currency. How can one then explain the difference between this and the much higher volume of currency moving in the economy? If there is an asset-liability mismatch on RBI’s books, how will it hide it? For, if all this ‘extra currency’ comes into PSBs and they deposit it back at RBI, RBI then has to pay extra interest also on this extra liquidity.

It’s a different matter that GoI has a windfall gain and interest rates will collapse. But this could cast serious doubts on the integrity of previous governments and RBI.

(The writer is chairman, Bajaj group)