India stops Printing of Rs 2,000 note, Currency
still valid
New Delhi: India has stopped
printing Rs 2,000 notes in a bid to slowly reduce their circulation, a highly
placed government source told ThePrint.The cut in circulation does not mean the Rs 2,000 notes will become invalid. In all likelihood, the denomination will be gradually phased out.The decision comes on the back of suspicion in the Modi government that the high-denomination banknote was being used for hoarding, tax evasion and money laundering.
As of March 2018, the total value of the currency
in circulation was Rs 18.03 lakh crore, of which Rs 6.73 lakh crore, or 37 per
cent, was in Rs 2,000 notes, and Rs 7.73 lakh crore, approximately 43 per cent,
in Rs 500 notes. The remaining was in the lower denominations.
A criticised move: When the Rs 2,000 note was introduced, the Narendra
Modi government was criticised for bringing out a note of such a high
denomination considering it had cancelled the Rs 1,000 note.
Opposition parties had argued that the Rs 2,000 note would further help money launderers and tax evaders, and backfire on one of the government’s stated aims for demonetisation — checking tax evasion and money laundering.
These fears seemed to have come true last April
when many Indian cities reported a massive cash shortage.
Opposition parties had argued that the Rs 2,000 note would further help money launderers and tax evaders, and backfire on one of the government’s stated aims for demonetisation — checking tax evasion and money laundering.
The government suspected cash hoarding ahead of
state elections, as well as stocking of money by people in the aftermath of the
PNB-Nirav Modi bank fraud. The income tax department also reported massive
seizures of Rs 2,000 notes during this period.
The critics included bankers, with Uday Kotak, the
managing director of Kotak Mahindra Bank, questioning the government’s move to
bring in Rs 2,000 notes while phasing out Rs 1,000 notes.
Falling currency: The squeeze in the circulation of the Rs 2,000
notes started some time back. The RBI’s annual report, released in August 2018,
showed that only 7.8 crore notes of the Rs 2,000 denomination were added in
2017-18, taking the total number of bills in circulation to 336.3 crore as of
March 2018. In 2016-17, 328.5 crore Rs 2,000 notes were in circulation.
The share of
the Rs 2,000 notes in the total currency in circulation has come down as well:
In March 2018, it was recorded at 37.3 per cent, a fall of nearly 13 percentage
points from 50.2 per cent as of March 2017. In contrast, the printing and
circulation of the new Rs 500 note has been stepped up. India added 958.7 crore
Rs 500 notes in 2017-18, with 588.2 crore notes in circulation the previous
year. The share of the Rs 500 notes in the total currency in circulation has
increased too, from 22.5 per cent in March 2017 to 42.9 per cent in March 2018.
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