Demonetization Impact May be Resolved by March
BENGALURU: It’s been one month since Demonetization was launched, yet India continues to struggle for cash. As Reserve Bank of India puts in extra efforts, it is now estimated that the crisis would get completely resolved by March 2017, as per Business Insider.
To facilitate this, Mint presses are working continuously for 7 days a week in three shifts. Because of which, there is a 50% increase in printing capacity. It is identified that just over 50% of the withdrawn notes would have come back into circulation by mid-January. "As per this calculation, the issue should be largely addressed by January and be taken care of by February,” a retired central bank official, who did not want to come on record, told The Economic Times.
As of now RBI has not commented on any of these issues. According to the RBI Annual Report for 2015-16, there were around 15.7 billion 
500 denomination notes and 6.3 billion of Rs 1,000 currency notes in circulation.
In order to reintroduce the entire amount back into the system, RBI would need to print 22 billion pieces. But only half of the 6.3 billion 1,000 notes need to be printed since the denomination has been increased to 2,000. This brings down the total printing requirement to about 18 billion pieces.
Generally, RBI prints around 20-23 billion pieces per year, and a 50% increase in capacity shows that all the four presses have a capacity to print 30-35 billion pieces. With this capability, central bank started printing new notes since October; therefore, probably more than six billion pieces would have been printed so far assuming a monthly run of about 2.5-3 billion.
Assuming total replacement of all the withdrawn notes would happen by March, it could ease the cash shortage by January as nearly around 10 billion pieces would have come back into the system. RBI officials have given a hint that they don’t intend to replace all withdrawn notes. However, Bankers who have been dealing with the issue report that there is a very high probability of all the notes not coming back into the system as cash.
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