Two years after introducing Rs 2,000 banknote, the Reserve Bank of India (RBI) has reduced the printing of the notes to "bare minimum" in an attempt to curb money laundering, according to a top RBI official. This means that the high-denomination Rs 2,000 notes would still be in usage and circulation, but will be eventually phased out.
It is to be noted that Rs 2,000 notes were introduced after the demonetisation move by the Narendra Modi government on November 8, 2016, that rendered Rs 500/1,000 notes illegal overnight in order to fight black money. The RBI official claimed that Rs 2,000 notes were introduced after the note ban to meet the remonetisation need.
When the Rs 2,000 note was launched, it was decided that the printing would be "scaled down" going forward. "The printing of 2,000 rupee notes has been substantially reduced. It has been decided to limit the printing of 2,000 currency notes to minimum. This is nothing new," the official said.
However, media reports suggest that the Centre's decision to phase out Rs 2,000 notes comes in the backdrop of growing suspicion in the Modi government that the high-value currency, instead of curbing hoarding and money laundering post demonetisation, have contributed to tax evasion and black economy.
Meanwhile, Subhash Chandra Garg, Secretary, Department of Economic Affairs, Ministry of Finance, said in a tweet on Friday that there had been no decision regarding Rs 2,000 note production recently. "Printing of notes is planned as per the projected requirement. We have more than adequate notes of Rs 2000 in the system with over 35% of notes by value in circulation being of Rs 2000. There has been no decision regarding 2000 rupee note production recently," he said.
The Centre's demonetisation move had sent shock waves globally and has been facing a lot of backlash ever since. India's sudden dip in economic growth was widely attributed to the note ban move. Economists across the world had predicted that the move would backfire the government.
also read
- Kotak Bank's growth plans to take a hit post RBI restrictions on digital channels; shares plunge 11 pc
- RBI bars Kotak Mahindra Bank from onboarding customers online, issuing fresh credit cards
- Extreme weather may pose risk to inflation, says RBI Bulletin
- Normal monsoon predicted for 2024. Is it enough to bring down inflation?
The senior official said the RBI and the government from time to time decides on the quantum of currency to be printed on the basis of money in circulation.
According to the RBI data, there were 3,285 million pieces of Rs 2000 notes in circulation at end-March 2017. A year after (on March 31, 2018), there was only a marginal increase in the number at 3,363 million pieces.
Of the total currency in circulation amounting to Rs 18,037 billion at end-March 2018, Rs 2000 notes accounted for 37.3 per cent, down from 50.2 per cent at end-March 2017.
The old 500/1000 bank notes that were scrapped in November 2016 accounted for around 86 per cent of the total currency in circulation at that time.
(With PTI inputs)
