Govt stops printing of Rs 2,000 notes to curb money laundering, currency still in circulation

Almost after 2 years of circulation, the government has stopped the printing of Rs 2,000 currency notes in order to curb money laundering and tax evasion.

The Rs 2,000 currency notes made its debut soon after PM Modi announced demonetisation. (Image: PTI)

New Delhi: Almost after 2 years of circulation, the government has stopped the printing of Rs 2,000 currency notes in order to curb money laundering and tax evasion, a highly placed source familiar to the development told ThePrint. However, this does not mean that Rs 2,000 notes will become invalid. It is being said that the high-value currency note will be gradually phased out in the longer run. The Rs 2,000 currency notes made its debut soon after Prime Minister Narendra Modi announced a ban on Rs 500 and Rs 1,000 notes, which wiped out 80 per cent of the currency in circulation. The government and Reserve Bank of India (RBI) take a call on the volume of currencies to be printed on the basis of money in circulation. When the Rs 2,000 note was launched, it had been decided that the printing would be ‘scaled down’, since the new high currency value note was meant for ‘remonetisation’, news agency PTI quoted a ministry official as saying. However, there is no official confirmation over the same from either RBI or the currency-issuing agency. According to the RBI data, there were 3,285 million Rs 2,000 notes in circulation in March, 2017. However, this number marginally increased to 3,363 million by March 2018. Of the total currency in circulation - Rs. 18,037 billion in March 2018 -- Rs. 2,000 notes accounted for 37 per cent, down from 50 per cent the previous year. The Central government was criticised by various opposition parties and economists for introducing such a high denomination stating that it would further help money launderers and tax evaders. However, the government maintained its stand and stated that the aim of demonetisation was to curb black money hoarding and putting a check on tax evasion.

Several economic experts including bankers raised concern over government’s move to bring Rs 2,000 notes while scrapping Rs 1,000 notes. These concerns seemed to have come true after reports of cash crunch emerged from various parts of the country in April last year. This was later said to have happened because of massive hoarding of Rs 2,000 notes during this period.