Rs 2,000 banknotes being hoarded: Ex-finance secy

Garg was designated finance secretary in March 2019 and could have become the longest-serving finance secretary if he had held the post until his superannuation in October 2020. PTI

A day ahead of the third anniversary of demonetisation, former finance secretary Subhash Chandra Garg, who took voluntary retirement last month after being shunted out of the high-profile finance ministry, Thursday warned that a good chunk of Rs 2,000 banknotes were actually not in circulation but being hoarded, suggesting they can be demonetised.

“Rs 2000 banknote accounts for approximately 1/3rd of currency notes in circulation in value terms. A good chunk of Rs 2000 notes are actually not in circulation, having been hoarded. Rs 2000 note, therefore, is not presently working as a currency of transaction.

‘It can be demonetised, without causing any disruption. A simple method, depositing these notes in the bank accounts (no counter replacement), can be used in manage the process,” he said in a note a day ahead of November 8. It was on the same day in 2016 that Prime Minister Narendra Modi had announced demonetisation, which rendered all high-denomination Rs 500 and Rs 1,000 banknotes illegal.

READ: Note ban@3: Fakes, cash are back; where is black money?

The government had subsequently introduced a higher denomination Rs 2,000 banknote, which in due course became easier to hoard.

Garg, a 1983-batch IAS officer of the Rajasthan cadre, who was unceremoniously removed from the finance ministry immediately after the Union Budget presentation of Modi 2.0 government, has also come down heavily on the Centre’s fiscal management, which he said, was not sound and stable.

“Despite serious efforts to control fiscal deficits in last five years, India’s fiscal management system is still not predictable, uses practices which are not sound and stable and runs levels of deficits and debt which are high and unsustainable,” Garg said a week after his retirement.

“Our commitment to bring down fiscal deficit to 3%, which is absolutely necessary for sound macro-economic management and also for bringing down high-interest rates, is not considered credible.

“Off-budget borrowings, payment of food subsidies by extending loans from NSSF, deferring of fertiliser subsidies by enabling availing of loans from Banks all needs to be discontinued and merged in the goal of 3%,” the former bureaucrat said, apparently reiterating many independent critics’ views.

Garg was designated finance secretary in March 2019 and could have become the longest-serving finance secretary if he had held the post until his superannuation in October 2020.

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