No decision regarding Rs 2,000 note production recently: Subhash Garg

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No decision regarding Rs 2,000 note production recently: Subhash Garg

There has been no decision recently regarding production of Rs 2,000 notes and its printing is planned as per projected requirement, Economic Affairs Secretary Subhash Chandra Garg said.

No decision regarding Rs 2,000 note production recently: Subhash Garg

“Printing of notes is planned as per the projected requirement. We have more than adequate notes of Rs 2,000 in the system with over 35 percent of notes by value in circulation being of Rs 2,000,” Garg said in a tweet today.

The Finance Ministry’s response comes a day after ThePrint reported quoting unnamed government sources the Reserve Bank of India (RBI) has stopped printing Rs 2000 notes and the move being aimed at slowly reducing the note’s circulation.

The Rs 2,000 note, along with the new Rs 500 note, was introduced in November 2016 to replace the demonetised Rs 1,000 and Rs 500 notes and to deal with the acute currency shortage.

The report also said that the decision also comes amid suspicion that the Rs 2,000 note is being used for money laundering, hoarding and tax evasion. However, the cut in circulation doesn’t translate into the note being deemed invalid.

Opposition parties had criticised the introduction of these notes as a higher denomination note would only make it easier for people to hoard money.

The critics also included bankers like Uday Kotak (MD of Kotak Mahindra Bank) who questioned the government’s move to bring in Rs 2,000 notes to replace Rs 1,000 notes.

In April 2018, there was an acute shortage of cash. The government suspected that the cash may have been hoarded ahead of state elections and in the aftermath of the Nirav Modi scam.

During the same period, the income tax department seized massive amounts of Rs 2,000 notes.

There have been indications of phasing out the Rs 2,000 note. The RBI annual report in August 2018 stated that only 7.8 crore notes of Rs 2,000 denomination were added in 2017-18, bringing the total to 336.3 crore Rs 2,000 notes in circulation as of March 2018.

Source: Network 18 creative.

The share of Rs 2,000 notes in the total currency circulation has experienced a steep decline, from 50.2 percent in March 2017 to 37.3 percent in March 2018.

As of March 2018, the total currency in circulation was Rs 18.03 lakh crores. Around Rs 6.73 lakh crore or 37 percent of the currency is in Rs 2,000 notes and Rs 7.73 lakh crore or 43 percent is in Rs 500 notes. The remaining is in lower denominations.

To compensate, the printing of Rs 500 notes has been increased. 958.7 crore Rs 500 notes were added to circulation in 2017-18, with 588.2 crore notes already in circulation since the previous year.

source: moneycontrol