2000 Rs note Ban or Is It a Myth? | The internet went crazy when RBI tweeted this post and released a notification on its official website:
Since we all know that RBI is officially removing 2000-rupee notes from circulation and that it will not continue as legal tender from September 30th, 2023.
The 2000-rupee notes were presented in November 2016 under the Section 24(1) of The RBI Act, 1934, basically to meet the money prerequisite of the economy in a quick way after the withdrawal of legitimate delicate status of all Rs 500 and Rs 1,000 notes that were available for use around then. The printing of 2000-rupee notes has been stopped since 2018-19 after the objective of stabilizing the economy was fulfilled.
Though the Prime Minister himself never wanted to introduce the 2000 Rs. notes but did so on his team’s advice says Ex-Principal Secy.
He stated that PM himself wasn’t willing on…. However, upon recommendation from his team, he (PM) authorized the notes…. But he was clear then…. that this was a short-term interpretation.
It is nothing but a myth:
RBI never said that the 2000 Rs noted won’t remain legal tender from now onwards. It said that the bank expects people to deposit the maximum of the notes into the banks.
The complete worth of these Rs 2000 banknotes available for use has declined from Rs 6.73 lakh crore at its top as on March 31,2018 (37.3% of notes available for use) to Rs 3.62 lakh crore comprising just 10.8% of notes available for use as on March 31, 2023.
RBI Governor Shaktikanta Das said officially that the withdrawal of 2000 Rs notes from circulation is part of a “clean note policy”. Majority of the 2000-rupee notes has been issued prior to March 2017 and are currently at the end of their average lifespan of 4 to 5 years as stated by RBI. The RBI Governor stated a similar situation in 2013-14 when notes printed before 2005 were withdrawn from circulation and citizens were advised to exchange them from the banks.
So why is everyone rushing to the banks?
Since people are thinking of the old days when demonetization took place and are terrified that waiting in queue for days was so much troublesome and tiring. This thinking led to a mass of pupils running to the banks for exchanging notes though there is still sufficient time.
Seeing such dis-settlement among the people, RBI Governor Shaktikanta Das said on Monday, “No reason to rush to the banks…Until we give a particular time the process will not reach its finality.”
What is the government doing this time to avoid a situation like demonetization?
The government has issued a notice that the general public can exchange these notes without any identity proof up to a limit of 20000 Rs. per day. From 23rd, May 2023 the effect will take place.
On Monday 22nd, May 2023 a PIL was issued in Delhi High Court that exchanging 2000 Rs notes without identity was nothing but an “irrational and arbitrary” move by the government.
The government said that the notes will be deposited into the bank accounts of the people who exchange the notes so that people with black money can be identified.
RBI this time has released a set of guidelines for banks in which one is providing a shaded space for customers and arranging drinking water for the public so that the least trouble is caused.
The Motive Behind This Big Move?
While the Reserve Bank of India has termed this 2000-rupee note ban as part of its "clean note policy", there is another one very major thought behind this move at this time, as stated by some analysts.
The L&T Finance Holdings' group chief economist Rupa Rege Nitsure stated, "Making such a move ahead of the general elections is a wise decision." She further stated that "People who have been using these notes as a store value may face inconvenience."
- The inscribed Political Angle: Some analysts point out that making this move ahead of the state elections in various states and the general Lok Sabha elections next year, this 2000-rupee note ban gives an upper hand to the current ruling party. This is because the cash usage typically spikes before every election and this move by the Government would be considered a masterclass as it will cut down the usage of black money by various political parties who use their stored cash as the means of their election funding.
Will this Affect the Economic Growth:
The current value of Rs 2000 denomination is approximately Rs 3.62 lakh crore which comprises just 10.8% of all the notes available for use. Thus, this withdrawal by the government won't be affecting the economic growth much as there are notes of smaller denomination available in sufficient quantity. Also there has been an upsurge in the use of online transactions and e-commerce in the last six to seven years, therefore there won't be much hindrance in the economic growth due to this move. There might be some inconvenience faced my small business and cash-oriented sectors such as real estate and construction industry, but that too would be for a limited time period.
THANKYOU FOR READING!
The move looks sudden but this time planned.
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