Demonetization: Printing presses add bill worth crores to RBI's losses
RBI has suffered severe losses due to demonetization. Earlier, it said 99% of demonetized Rs. 1,000 notes had returned, thus defeating the whole purpose of the move which was to eradicate black money. Then came Raghuram Rajan's scathing criticism and more questions arose. Now currency printing presses have added their own bill to the ongoings: they have demanded reimbursement of Rs. 577cr.
Factors behind the combined Rs. 577cr loss by four presses were many: before November 8, 2016, they had imported huge consignments of paper for Rs. 1,000 and 500 notes for orders still in process; ordered consignments which had already been prepared and were to be shipped; and wasted material exclusively used for those notes. All were described as losses due to "work in progress".
The four presses in question - two of the SPMCIL (Nashik and Dewas) and two of the BRBNMPL (Mysore and Salboni) - do no commercial work. Hence there's no option for the RBI but to compensate them for the losses they accrued.
Post demonetization, the RBI faced increased printing costs of new notes- 133% jump from July'16-June'17. It resulted in seigniorage loss to the RBI "as the face value of Rs. 15.28L crore of Rs. 17.10L crore has been printed", SBI said. Meanwhile, the RBI still has "no information" on how much black money was removed. Total costs aren't yet clear, but will be huge.
