₹2,000 note won’t be phased out

dubai — The Indian government will not phase out the ₹2,000 notes from circulation as it is a matter of credibility and could create unnecessary disruption, a former economic affairs and revenue secretary of India said.

Shaktikanta Das rejected this rumour that appeared in the Indian media as the country marks the first anniversary of the removal of ₹500 and ₹1,000 notes.

“People still raise those questions that when you are eliminating the ₹1,000 note, then what is the point in issuing ₹2,000 notes. But it was important to ensure faster remonetisation and replacement of currency of value that you’re taking out of the system. Because when you demonetise one lakh notes of ₹1,000 and instead replace them with ₹2,000notes, you’re doubling the value of the money in circulation,” Das said while addressing the 29th Annual International Seminar of the Institute of Chartered Accounts of India in Abu Dhabi.

“The ₹2,000 note will stay; as long as I was there, there was no such thinking because the removal will create unnecessary disruption and credibility issues. However, now the Reserve Bank of India’s focus is on ₹500 and lower denominated notes,” he added.

Indian Prime Minister Narendra Modi’s government announced demonetisation of ₹500 and ₹1,000 notes to eliminate black money from the country in November last year and replaced them with new ₹500 and ₹2,000 notes. Das played a key role and was instrumental in planning and executing the process.

“Demonetisation was a very difficult challenge — only 10 people were aware of it. It shows the highlevel of commitment and professionalism [of those] who kept it secret, even from their close family members. The whole discussion started prior to the budget in 2016. Various options were examined.

demonetisation was a very difficult challenge — only 10 people were aware of it. It shows the highlevel of commitment and professionalism [of those] who kept it secret Shaktikanta Das, former economic affairs and revenue secretary of India

Then it was decided that you can’t make this demonetisation process as part of the budget, so it was decided to done it separately to give time ourselves to prepare for it,” Das said.

By reducing the size of the notes, according to Das, the government saves 20 per cent in terms of printing costs.

“All aspects prior to demonetisation were examined. For example, indelible inks was discussed. Because what if same person comes again and again and the poor people would be used to exchange currency? But then we thought that the usage of indelible link — which is used in elections — will be intrusive in the lives of the people and add workload for bank personnel and delay bank transactions, too,” he said.

“We didn’t do it. But then we saw the same person coming again and again. It was evident that they were standing for somebody else. Some companies sent their workers and casual labourers to stand in the queue. So we had no options but to use indelible ink and then the queues nearly halved,” he added. — waheedabbas@khaleejtimes.com