Image: REUTERS
The Central Bank of India has announced to remove the 2000 rupee note from circulation in the market ahead of general and state elections. The announcement was made on Friday according to which citizens are asked to exchange or deposit the highest denomination currency notes by September 30th, 2023.
The 2000 rupee note was introduced in 2016 and is likely to remain a legal tender in the future.
This decision reminds us of the 2016 move when the Modi government withdrew 86% of the economy’s currency overnight. However, the recent decision seems to be less shocking as the notes with lower values have been withdrawn for a longer period of time.
The question is why the government is Withdrawing 2000-rupee notes now? According to economists, the 2000-rupee notes were introduced in 2016 to stabilize the Indian economy’s currency in circulation post-demonetisation. However, the central bank emphasises that it is time to reduce circulation of high value notes while halting their printing for the last four years.
The Reserve Bank of India said, “This denomination is not commonly used for transactions.”
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Rupa Rege Nitsure who is Group Chief Economist at L&T Finance Holdings said, “Making such a move ahead of the general elections is a wise decision.” She added, “People who have been using these notes as a store of value may face inconvenience.”
