Another Dose of Demonetisation?
Some people are considering 'Withdrawal of 2000 Rupee Note' as 'Another Dose of Demonetisation'.
RBI has withdrawn its highest denomination currency note in circulation, the 2000-rupee banknote (₹2000) from circulation from Friday, 19 May 2023. It has issued an order to banks not to issue these notes with immediate effect.
It will however continue to be a legal tender. People can exchange or deposit these notes in bank accounts up to the limit of ₹20,000 at a time, until September 30, 2023.
Why did RBI introduce these 2000 Rupee Notes?
RBI had released 2000 Rupee Notes on 8 November 2016, as per Section 24(1) of the RBI Act, 1934. The purpose of issuing this note was to meet the currency requirement of the economy, after the demonetisation of ₹500 and ₹1000 banknotes.
Need to discontinue circulation of 2000 Rupee Note:
Some say that the then purpose of ‘November 2016 Demonetization’ was over. According to RBI, it stopped the printing of ₹2,000 banknotes in 2018-19. It issued about 89 per cent of the ₹2000 denomination banknotes before March 2017. RBI didn't print new ₹2000 notes during the 2019-20 financial year.
As per RBI, "Some people use the ₹2000 note for hoarding and tax evasion", as a reason to stop it from circulation. Cutting the circulation of ‘Big Currency Notes’, will curtail the illegal activities and corruption.
Reputed Economist and former Chief Statistician of India Mr. Pronab Sen has called this ‘withdrawal of the higher-value note’, "A sensible form of Demonetisation."
The Effects of Gradual Removal of 2000 Rupee Notes
- As an immediate effect, that common people and shopkeepers started hesitating to accept ₹2,000 banknotes. There was no direct effect on Day-to-day transactions unlike the previous Demonetisation of November 2016.
- The efforts of some people to make the best use of their ₹2,000 currency notes by buying gold jewellery the next day of announcement, gave a clue to common man that gold prices will jump upwards.
- But, according to some experts, as people can purchase for cash jewellery only up to ₹200,000, this decision of the Reserve Bank of India's (RBI) will not affect the price of gold or the value of the rupee significantly. Even if people try to convert their ₹2,000 notes into US dollars, there will not be any major change in the value of Indian rupee.
- Some experts say that people were not hoarding these notes due to uncertainty carried by these notes. This time, there is sufficient time to change these notes and hence there would not be any major problem.
Refusal to Take 2000 Rupee Notes?
If someone faces a problem of refusal by a bank branch, or any other entity to accept the 2000 rupee note for exchange, he can lodge a complaint at the concerned bank before 30 September 2023. If the bank does not respond within 30 days, he has the option to register a complaint on the RBI portal.
Politically, some people have called it, the second Surgical Strike on Black Money.
We can see its ultimate effect only with the passage of time.