New Delhi: Two years after its shock launch and after repeated warnings, the government has finally realised that the high denomination currency notes are used for hoarding and tax evasion. Therefore, the government has not only decided to gradually phase out the Rs. 2,000 currency notes from circulation but has also asked the Reserve Bank of India (RBI) to stop printing new 2,000 denomination notes.
The Rs 2,000 note was introduced in November 2016 after demonetisation or a ban on the use of 500 and 1000 currency notes. The Narendra Modi government announced demonetisation to flush out black money, hoarding, tax evasion and money laundering.
The opposition had ever since the launch of Rs. 2000 currency notes in 2016 warned the Modi government that it will have the opposite effect.
The government has finally realized this now. According to The Print, the decision to stop printing new 2000 currency notes has been taken on the back of suspicion in the government that the currency note was being used for hoarding, tax evasion and money laundering.
As of March 2018, the total value of the currency in circulation was Rs 18.03 trillion, of which Rs 6.73 trillion, or 37 per cent, was in Rs 2,000 notes, and Rs 7.73 trillion, approximately 43 per cent, in Rs 500 notes. The remaining was in the lower denominations.
Speculations that Rs 2000 currency notes will be discontinued and phased out from circulation had also surfaced in July 2017. In the same month, reports also suggested that the RBI had stopped printing new 2000 currency notes.
Back in December 2016, RSS ideologue S. Gurumurthy had said that the Rs 2,000 currency note was a "stopgap arrangement" to tide over the cash crunch after demonetisation, and it would ultimately be withdrawn by the government, albeit gradually.
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