New Delhi (Sputnik) — The Indian government has stated that it is unlikely to accept demonetized Indian currency notes from Nepal and Bhutan. India, along with Nepal, Bhutan, Bangladesh, Myanmar, Sri Lanka and Thailand, is a member of BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), which 4th Summit is underway at present in Nepal.
"I think they (Nepal, Bhutan) have very little INR 500 and INR 1000 currency notes. No final decision yet on exchanging of demonetized notes in Nepal, Bhutan. There are very little chances that we will accept those Indian notes lying there in Bhutan or Nepal," Subhash Chandra Garg, the Indian finance ministry's topmost official, told media in New Delhi on Wednesday.
On November 8, 2016, India demonetized 80% of its currency notes, replacing them with new notes of different denominations in what was claimed to be a drive against black money and counterfeit currency.
The step caught Nepal and Bhutan off guard, as the two neighbors have had significant reserves and usage of Indian currency, with Bhutan giving it the status of legal tender within its borders. Nepal Prime Minister K.P. Sharma Oli reminded Indian Prime Minister Narendra Modi during the bilateral meet in May this year about the demonetized Indian notes worth around $146 million still stranded in the Himalayan nation. It is believed that Bhutan has a reserve of INR 30 billion (approx. $450 million).
Former Finance Minister P. Chidambaram alleged that the RBI figure suggests that the government actually demonetized only INR 13,000 crore and the "country paid a huge price" for it.
"I suspect that the bulk of the Rs 13,000 crore currency is in Nepal and Bhutan and some that were lost or destroyed," Chidambaram tweeted.
Chidambaram said that the Indian economy lost 1.5 percent of GDP in terms of growth due to the demonetization exercise.