Since the Prime Minister announced demonetisation on November 8, there has been a lot of calculation and research being done, on how much money will come back to the system and how much will not. Dr Soumya Kanti Ghosh of State Bank of India calculates that that around Rs2.5 lakh crore will not be returned to the system. Here is his logic.
As of November 9, 2016, the amount of high currency denomination notes was Rs15,441 billion, excluding the cash with banks. Till date the Reserve Bank of India (RBI) has published data regarding the deposited/exchange notes, twice, with a gap of 9 days, 10-18 November and 19-27 November.
The total money deposited/exchanged during the period 10-18 November was Rs5,446 billion, with an average of Rs605 billion per working day and during the period 19-27 November was Rs3,004 billion, with an average of Rs501 billion per working day. This shows a 17% decline in average working day deposit/exchange money.
As is evident from the data, the daily deposit average is on a declining trend. The remaining three days of November can be conservatively assumed to have an average of Rs375 billion per day (25% less than what came during 19-27 November) i.e. a total of Rs1,125 billion.
Breaking December into three different periods, a total of Rs3,360 billion can be assumed to be returned to the system (Rs1,500 billion between 1-7 December, Rs900 between 8-15 December and Rs960 between 16-30 December). As per the assumptions, Rs10 billion will be deposited during 1 January to 31 March 2017.
Adding these numbers up, Rs12,945 billion will be returned to the system against Rs15,441 billion as of November 9, 2016 and Rs2,496 billion will not be returned, as per SBI research.