New Delhi/ Mumbai: The RBI's revelations on demonetisation have sparked a war of words between the Opposition and the government.

"Every rupee of the Rs 15.42 lakh crore (barring a small sum of Rs 13,000 crore) has come back to the RBI," tweeted former finance minister P. Chidambaram. "So, government and RBI actually demonetised only Rs 13,000 crore and the country paid a huge price."

Chidambaram rubbed it in by suggesting that the demonetisation exercise had also wrecked the economy.

"The Indian economy lost 1.5 per cent of GDP in terms of growth. That alone was a loss of Rs 2.25 lakh crore a year. Over 100 lives were lost. 15 crore daily wage earners lost their livelihood for several weeks. Thousands of small and medium enterprise units were shut down. Lakhs of jobs were destroyed," he said in a series of tweets.

Said Dr Arun Kumar, Malcolm S. Adiseshiah Chair Professor at the Institute of Social Sciences and writer of the authoritative book The Black Economy in India, said: "Some Rs 3 lakh crore was expected to be snuffed out as black or unaccounted money which would not be returned to banks and that, in turn, would lead to a gain for the RBI which it would pass on to the government and would reflect in our budget.... That does not seem to have happened."

Estimates of black money in India vary from 20 per cent of GDP according to a World Bank study to Kumar's own estimate of 62 per cent of GDP. "Last year they said some 99 per cent had come back but added a caveat that they were still counting... which leads us to the question why did it take such a long time to count?" the economist asked.

A perturbed North Block fielded economic affairs secretary Subhash Chandra Garg at a hurriedly called news conference where he claimed "the demonetisation has achieved its objectives positively".

However, Garg was short on statistics to back up his claim and merely said that deposits worth some Rs 3 lakh crore were being investigated.

The economic affairs secretary asserted that the most successful objective of the demonetisation exercise was the switch to digital transactions, which meant that there was Rs 3-4 lakh crore less cash in the economy.

But this was a lie since the RBI's latest statistics show that currency in circulation has swelled to Rs 19.43 lakh crore as of August 17 this year - about Rs 4 lakh crore more than it was on the day demonetisation was announced.

Said Pronab Sen, economist and former chairman of the National Statistical Commission: "It was known that the demonetisation would not be able to unearth black money as such cash never remains static but rather flows into the stock, bullion and realty markets or into trading."

Kumar said much of the money that had not been returned probably represented the cash left with the central banks of Nepal and Bhutan where the Indian currency is accepted as legal tender as well as money left "with NRIs, and the old and infirm who were unable to exchange old notes within the stipulated time.... It seems the exercise has not succeeded in unearthing black money at all".

Nepal has been pressing India to accept its trove of old scrapped notes worth an estimated $146 million that are lying with Nepali citizens and banks but India has not agreed yet. Garg said no decision had been taken about accepting these notes.

"Besides formal acceptance, there are the ICRIER (Indian Council for Research on International Economic Relations) studies which show that India currency is used in informal trade with Bangladesh, Myanmar and Afghanistan. A large cache of demonetised Indian currency should be lying there too," Sen said.