India will stop issuing 2000-rupee note, presently the highest currency note in the country, according to its central bank, Reserve Bank Of India, on Friday.
The currency note was introduced in 2016 when the Narendra Modi-led central government demonetised 500 and 1000 rupee notes, accounting to 86% of the economy’s currency, overnight that year. The 2000-rupee note will remain legal but the government has asked citizens to deposit or exchange them by September 30, 2023.
Why the government scrapped 2000-rupee notes?
In 2016, when the government introduced 2000-rupee notes it intended to fulfil the economic need after the shortage created by demonetization. But the Reserve Bank has maintained regularly that it intends to lessen the circulation of 2000-rupee notes and as a result it had stopped printing these notes over the past four years.
While explaining the decision behind the move, the RBI said, “This denomination is not commonly used for transactions.”
What economists say?
Rupa Rege Nitsure, group chief economist at L&T Finance Holdings, said, “Making such a move ahead of the general elections is a wise decision. People who have been using these notes as a store of value may face inconvenience.”
3.62 trillion Indian rupees ($44.27 billion) worth of notes denominated in 2000-rupees are currently in circulation. This represents roughly 10.8% of the currency in use.
Nitsure added, “This withdrawal will not create any big disruption, as the notes of smaller quantity are available in sufficient quantity. Also in the past 6-7 years, the scope of digital transactions and e-commerce has expanded significantly.”
Opposition slams Govt over withdrawal of 2000-rupee notes
India’s former Finance Minister P Chidambaram called the introduction of 2000-rupee notes as “band-aid”. Taking to Twitter, the leader of the opposition party, Congress, wrote, “The Rs 2000 note was a band-aid to cover up the foolish decision of demonetising Rs 500 and Rs 1000.”
As expected, the government/RBI have withdrawn the Rs 2000 note and given time until September 30 to exchange the notes
The Rs 2000 note is hardly a popular medium of exchange. We said this in November 2016 and we have been proved correct
The Rs 2000 note was a band-aid to…
— P. Chidambaram (@PChidambaram_IN) May 19, 2023
The All India Trinamool Congress (AITC), which rules the Indian eastern state of West Bengal, through its official handle, tweeted, “@BJP4India demonetised ₹500 & ₹1000 notes in 2016, disrupting the lives of Indians everywhere! They claimed that the introduction of ₹2000 note would curb the flow of black money”.
.@BJP4India demonetised ₹500 & ₹1000 notes in 2016, disrupting the lives of Indians everywhere!
They claimed that the introduction of ₹2000 note would curb the flow of black money.
7 years later, they are withdrawing it from circulation. Yet another MODINOMIC masterstroke? pic.twitter.com/g2v6W0E0qC
— All India Trinamool Congress (@AITCofficial) May 19, 2023
India’s capital Delhi’s Chief Minister Arvind Kejriwal, leader of the Aam Aadmi Party (AAP) condemned the central government’s decision of scrapping 2000-rupee notes. He wrote on Twitter, “First they said that by bringing 2000 notes, corruption will stop. Now they are saying that by banning 2000 notes, corruption will end. That’s why we say, PM should be educated. Anyone can say anything to an illiterate PM. He doesn’t understand. The public has to suffer.”
पहले बोले 2000 का नोट लाने से भ्रष्टाचार बंद होगा। अब बोल रहे हैं 2000 का नोट बंद करने से भ्रष्टाचार ख़त्म होगा
इसीलिए हम कहते हैं, PM पढ़ा लिखा होना चाहिए। एक अनपढ़ पीएम को कोई कुछ भी बोल जाता है। उसे समझ आता नहीं है। भुगतना जनता को पड़ता है।
— Arvind Kejriwal (@ArvindKejriwal) May 19, 2023
