Government of India and the Reserve Bank of India seem to be bringing down the number of 2,000 rupee notes in circulation, even though no decision has been taken to phase them out.
2,000-rupee notes were introduced soon after the demonetization of 1,000-rupee notes in late 2016.
Their introduction came for heavy criticism and was seen as a retrograde step that would make it easier for people to stash large amounts of illegitimate funds in the form of cash.
This was particularly so as one of the stated reasons for the demonetization of the 1,000-rupee note was cracking down on the practice of stashing away illegitimate funds and curbing corruption.
However, since the demonetization, the number of 2000-rupee notes kept increasing steadily. The latest numbers show that their numbers are now being brought under control, after peaking around the 2019 general election. Typically, demand for cash goes up sharply during elections in India.
According to data from the Finance Ministry, the number of 2000-rupee notes fell to 27,398 by the end of March 2020 from 32,910 at the end of March 2019.
Despite being relatively few in number, they accounted for around 30% of the Rs 21 lakh cr worth of currency in circulation in India as of March 2019. By March 2020, their share had fallen to 22.5%.
Finance ministry also said no fresh order has been placed for the printing of 2,000 rupee notes since April 2019.
“During the year 2019-20 and 2020-21, no indent has been placed with the presses for printing of Rs. 2000 denomination notes.
“However, there is no decision to discontinue the printing of Rs. 2000 denomination bank notes by the Government,” it added, indicating that the notes may be pumped back in the future in case of high demand, such as before an election.
Even though the COVID-19 lock-down disrupted the printing of other currency notes as well, said the ministry, their supply of the same was not disrupted.
“Both bank note presses of SPMCIL, that is, Currency Note Press, Nashik and Bank Note Press, Dewas, were closed down w.e.f. March 23, 2020 due to lockdown declared by Central/State Government for COVID-19 pandemic. Currency Note Press, Nashik and Bank Note Press, Dewas resumed full-fledged production activities w.e.f. June 08, 2020 and June 01, 2020, respectively.
“During the period of lockdown, note printing presses have uninterruptedly supplied notes to RBI offices/currency chests from stock of notes available with them through Indian Railway Treasury Wagons etc,” it added.