₹2000 Notes: The Reserve Bank of India has put 2000 notes out of circulation. This decision of the Central Government has been justified by Dr. Krishnamurthy Subrahmanyan, former Economic Advisor of the country. Subramanian said that 2000 notes have been recovered in most of the raids, as these notes were being used for hoarding. Dr. Krishnamurthy was the Chief Economic Advisor from 2018 to 2021. He said that the move to withdraw Rs 2,000 notes is overall a good step. He gave six reasons why this step is important.
RBI’s decision to withdraw ₹2000 notes is important because:
(1) The move will help to ferret out a substantive part of the ₹3.6 lakh crores of Currency In Circulation (CiC) in ₹2000 notes currently (refer to the circular below, esp. the highlighted portion). As we have seen… pic.twitter.com/B4uNGCSlkr
— Dr. Krishnamurthy Subramanian (@SubramanianKri) May 19, 2023
Why important step, here are those six reasons
1. Rs 2,000 notes were found in raids at many places. Which proves that the currency was being used mainly for hoarding money. 80% of the people who are legally holding this currency have only 20% in their deposits. On the other hand, 20 per cent hoarders are likely to have 80 per cent of the Rs 2,000 deposited notes.
2. This step will not cause inconvenience to the common people, as two thousand notes are not being used in large numbers for economic transactions.
3. There has been a decline in the role of notes especially Rs 2000 notes as physical currency, as a large number of digital payments are being used.
4. 500 note can be used as a medium of exchange instead of 2000 rupee note.
5. Digital transactions are expected to grow 3X from now to 2026. Due to which the requirement of 2000 note as a medium of exchange will further reduce in the coming years.
6. Most importantly, as stated by the RBI, the Rs 2000 note will continue to be legal tender. Those having Rs 2,000 notes can deposit or exchange it. Now the last date for submission is 30 September. It can also be extended.
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