Why government may 'demonetise' new Rs 2,000 note
“Where are the Pink Notes? That's a Rs 2,000 Question” - was the screaming headline of The Economic Times’ Delhi edition on July 20.
The conclusion was drawn after talking to several bankers and ATM operators. Neeraj Vyas, chief operating officer of State Bank of India, was quoted as saying: “Presently, we are receiving currency notes from the Reserve Bank in denomination of Rs 500 in high-value currency.” He went on to say “the 2,000 denomination notes are coming over the counters by way of recirculation”.
Though the RBI hasn’t responded to ET’s query, the report says the central bank continues to pump in Rs 500 currency notes ensuring that there is no overall cash crunch, as happened during demonetisation last year.
Bankers say this could be part of the strategy of RBI to keep a leash on the total amount of high value currency in circulation. But could this also be the beginning of the end of the pink notes? Let me give you my reasons for such suspicion:
SBI is recalibrating its ATMs
This report itself says that out of the 2.2 lakh ATMs in the country, around 58,000 ATMs are of SBI. The country's biggest bank has started to recalibrate the Rs 2,000 currency cassettes in a few of its ATMs to Rs 500 currency ones so that more cash can be stuffed inside the machines. That means, in the recalibrated ATMs Rs 2,000 notes can’t fit in. So effectively, it’s the end of the Rs 2,000 notes on these machines.
It was a temporary measure
In March, The Statesman had carried a report saying that in order to curb fresh generation of black money, the government is preparing to gradually phase out the Rs 2,000 note. An official was quoted saying: "The idea behind introduction of the high denomination Rs 2,000 notes was to quickly remonetise the economy with the value in circulation.” It was a stop-gap arrangement and now there is enough currency and hence the note should be given the marching orders.
People like Ramdev opposed it
There was criticism from various corners since the introduction of the Rs 2,000 note, that it will make illegal dealings smoother and increase the generation of black money. Campaigners’ against black money like yoga guru Baba Ramdev too said the government, in the future, should reconsider the decision to introduce the Rs 2,000 note. He also said he did not like the decision to introduce Rs 2,000 notes after demonetisation.
RSS ideologue said Rs 2,000 note will be phased out
In December 2016, RSS ideologue S Gurumurthy, who reportedly advised the government on demonetisation, said the new Rs 2,000 note will be phased out within the next five years. Speaking to India Today, he supported the notion of lower-denomination banknotes for the country. He too described the new 2,000 bills as a "bridge" to meet the gap in cash while it was being taken out of circulation after demonetisation. He said: “They will remonetise it without demonetising and then withdraw it."
Rs 2,000 note is attracting more fake money dealers
In February, there was a news report in the Hindustan Times which said the Rs 2,000 note might just become Prime Minister Narendra Modi’s Achilles’ heel in his mission to crack down on black money. It rightly said that the larger the denomination, the impact on money laundering and fake currency is higher. Larger the notes, easier it is for drug traffickers, gun dealers, and smugglers to carry large sums of money. It means it will defeat all objectives enunciated by the government for demonetisation.
RBI may soon issue Rs 200 note
There are reports that the RBI intends to issue Rs 200 notes to make daily transactions easier for people. Though there is no official confirmation of this, an image of the Rs 200 denomination is doing the rounds on social media. On April 5, 2017, countering such rumours, Minister of State for home Kiren Rijiju said in the Rajya Sabha that there are no plans to demonetise the new Rs 2,000 currency notes.
This may be the government’s official stand but is it true? Aren’t various actions of the government along with critical voices and news reports suggesting that the Rs 2,000 note may not have a long life?