Mumbai: The printing of Rs. 2,000 notes, which debuted after Prime Minister Narendra Modi’s shock demonetisation move in 2016, has been reduced to a “minimum” by the Reserve Bank of India, a top finance ministry official said, amid reports that it is being phased out.
Soon after the overnight ban on Rs. 500 and 1,000 notes, which wiped out 80 per cent of the currency in circulation, RBI came out with the Rs. 2,000 note along with a new look Rs. 500 note.
The RBI and the government decide from time to time on the currency to be printed on the basis of money in circulation.
When the Rs. 2,000 note was launched, it had been decided that the printing would be “scaled down”, since the new high currency value note was meant for “remonetisation”, said the official. “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 a minimum. This is nothing new,” the official said.
The reduction in circulation does not mean the Rs 2,000 notes will become invalid. In all likelihood, they will be gradually phased out. The decision has possibly been spurred by the realisation in the Modi government that the high-denomination banknote is being used for hoarding, tax evasion and money laundering.
So, to that extent, the rationale for weeding out the Rs 1,000 note has been defeated. In fact, when the Rs 2,000 note was introduced, Opposition parties had argued that it would recoil on one of the government’s stated aims demonetisation checking tax evasion and money laundering.
These fears were reinforced last April when many cities reported a massive cash shortage. The government suspected cash hoarding ahead of state elections, as well as stocking of money by people in the aftermath of the PNBNirav Modi bank fraud. In contrast, the printing and circulation of the new Rs 500 note has been stepped up.