On 19 May, the Reserve Bank of India announced that it is withdrawing the circulation of ₹2000 currency notes. RBI informed that it had stopped printing the ₹2000 notes in 2018-19, most of the notes have reached their end of life, and therefore the notes are being withdrawn in pursuance of the “Clean Note Policy”. The central bank also noted that the note is no longer commonly used for transactions, as its circulation has come down from 26.73 lakh crore in March 2018 to 3.62 lakh crore in March 2023.
The RBI has said that people can exchange the ₹2000 notes they may be having at banks from 23 May to 30 September. Only ₹20,000 can be exchanged at a time, which means taking notes in other denominations by depositing ₹2000 notes. There is no limit on depositing the ₹2000 notes in bank accounts.
However, the usual suspects have started criticising the Modi government on the decision by the Reserve Bank of India. Arvind Kejriwal claimed that govt had said that corruption will end with the introduction of ₹2000 notes, and now govt is saying withdrawing the ₹2000 note will end corruption. Adding his familiar rant on PM Modi’s education, he said that this is the reason why he says that the PM should be educated, as 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
— Arvind Kejriwal (@ArvindKejriwal) May 19, 2023
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।
However, nowhere the RBI or the government has said that the note has been withdrawn to end corruption. RBI has said that the note is not popular among people, its printing stopped almost 5 years ago, as a result, the small numbers of notes still in circulation are in bad shape. Therefore, it has been decided to withdraw from circulation as per the clean note policy.
Delhi’s AAP minister Saurabh Bharadwaj claimed that the concept of stopping the circulation of notes was started by PM Modi.
#WATCH | "This whole concept of starting the circulation, stopping the circulation of notes, or issuing of new notes, was started by PM Modi and the economy suffered due to this… I don't know what will be the pros and cons of this step but I hope the decision was taken by the… pic.twitter.com/lCg4i1PS9j
— ANI (@ANI) May 19, 2023
He claimed that the economy suffered due to the change in banknotes. However, that is a completely false claim, as the RBI regularly introduces new designs of banknotes, and gradually withdraws the old notes. For example, in January 2014, the RBI had withdrawn the circulation of all banknotes issued prior to 2005.
Similarly, the central bank has gradually withdrawn ₹1, ₹2 and ₹5 banknotes, and have replaced them with coins.
It is also being claimed that it is a ‘sudden’ decision, and it will cause trouble for people.
All of a sudden, one man announces the introduction of 2000₹ & declares #Demonetisation.
— 🧬Dr. Namrata Datta (Singa Pen), PhD🧫🇬🇧🦘🇮🇳 (@DrDatta01) May 19, 2023
– Hundreds have died waiting in queues.
– Lives have been turned upside down, with patients suffering in hospitals, marriages shattered at the eleventh hour, and jobs lost.
Years later,… pic.twitter.com/7zYSdHWjtT
This is also a completely wrong claim, as there is nothing suddenness in the decision. First, the ₹2000 has already almost disappeared from circulation. It is not dispensed by ATMs, most people no longer used this note. Second, it is not that the note has been demonetised like the 2016 decision. The note remains a valid legal tender and will remain so till 30 September. Therefore, there are more than 4-month time to exchange or deposit the notes anyone might be having. However, the banks will not issue the note to customers from now on, as per the RBI order.
Moreover, it was already known that the issue of ₹2000 notes was a temporary measure, to reduce the impact of the sudden demonetisation of ₹500 and ₹1000 notes in October 2016. With its printing stopped in 2018-19 and its dwindling circulation, it was just a matter of time before it was withdrawn. If there was no prior decision to withdraw the note, the RBI would not have stopped printing it just 3 years after introducing it. In 2018 it formed 38% of the total cash chest and in 2023, it is only 10.8%. It is evident that the notes were taken out of circulation in a gradual manner and therefore, the current move was in play for a long time before being announced, so as to minimise the trouble caused to the common public.
In 2020 itself, reports started to appear in the media about the disappearing ₹2000 notes. The media reports had said that the ATMs were dispensing only ₹500 notes. Anyway, not all ATMs were configured to dispense the ₹2000 notes after its introduction, limiting its distribution since the beginning. It was predicted the notes will be eventually withdrawn, as the RBI had already stopped printing it by then.
In September 2020, PM Modi’s former principal secretary Nripendra Mishra had written in the Times of India that PM Modi was not in favour of introducing the ₹2000 note after demonetisation but accepted the suggestion of officials who felt that speedy printing of the high denomination note would increase the availability of cash. However, PM Modi never blamed the officials for the same, even though he was criticised for introducing the high-value note.
Mishra had added that after the availability of notes of other denominations improved, PM Narendra Modi did a course correction by discouraging the printing of ₹2000 notes.
RSS advisor S Gurumurthy had said in 2016 itself, months after the introduction of the high-value note, that it was a stopgap arrangement. He had correctly predicted that it will be ultimately be withdrawn, but gradually.
The claims of the inconvenience of people are also questionable. The note is already almost out of circulation, which means most people don’t have it. For those who may be having the banknote, there is enough time for them to exchange them at any bank, or deposit them in their bank accounts. Moreover, the note remains legal tender for now, which means they can be used for regular transactions.
Therefore, it is not a sudden decision, but a widely anticipated one. From the beginning, most people had known that it was a temporary arrangement and that the note will be withdrawn later. And as the note started to disappear from circulation, it became clear to everyone that its days are numbered. It is unlikely that common people will face any harassment like demonetisation, as it is a completely different situation.
