Cost concerns about DeMo, 2016

Cost and effect of DeMo

This refers to Shishir Sinha’s interesting report “RBI won’t say how much it cost to collect, destroy DeMo notes” (TheHindu Business Line, BL Exclusive, October 11). Just as Hotel Taj will not be able to give accurate information, if one asks the details of cost of inputs, expenditure incurred on value addition, income from sales and profit/loss on making and selling rotis during a particular period, for RBI, it would not be easy to give the details in respect of DeMo, in the ‘format’ desired by the RTI applicant (Business Line in this case). Some information relevant in this context, excerpted from the “Table XII.10 Expenditure” of RBI Annual Report 2017-18 (Page 227) is given in the following table:
Expenditure (Rupees crores)

Details
2014-15
2015-16
2016-17
2017-18
ii
Employees cost
4058
4477
4621
3848
iv
Printing of notes
3762
3421
7965
4912
v
Provisions
1000
1000
13190*
14190*

Total**
13356
14990
31155
28277
*Provision for transfer to Contingency Fund
**As some rows have been excluded, details won’t add up to the totals in this row.
As may be observed, there was a rise of 133% in RBI’s expenditure on the printing of notes during the DeMo year against a rise of 108 percent in total expenditure. 81.5% of the rise in total expenditure was accounted by the increase in provisions for transfer to the Contingency Fund which is unrelated to DeMo. Extra earnings from the disposal of shredded/briquetted SBNs (which may still be a work in progress) could notionally set off extra expenditure on withdrawal of SBNs.
M G Warrier,Mumbai




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