Paper Money

Rumors continue to swirl around India’s currency

The Indian currency mess continues to get messier. On Dec. 23 Finance Minister Arujn Jaitley denied rumors that the government was going to ban its highest denomination, the 2,000-rupee note. 

This was after a story surfaced that the Reserve Bank of India was either holding notes back or had stopped printing them. These were the notes issued with little advance warning in November 2016 after the sudden demonetization of the popular and widely held 500- and 1,000-rupee notes.

Jaitley said to a media assembly: “Many such rumors are being spread, which are wrong. Don’t believe such things till any official announcement is made.” Within days, an official announcement partially confirmed some of the rumors.

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In the Jan. 3 statement, the Finance Ministry said that printing of the 2,000-rupee note had been “reduced to the minimum” by the Reserve Bank. A spokesman added that decisions like this are based on the money in circulation. According to the bank, 3.285 million 2,000-rupee notes were in circulation at the end of March 2017, and that number only marginally increased, to 3.363 million pieces, in circulation a year later. In 2018 the 2,000-rupee note accounted for 37.3 percent of notes in circulation, down from 50.2 per cent in the prior year.

The Print, an online Indian news site, said on Jan. 3 that the move was part of an effort to slowly reduce their circulation, and that the denomination will probably be gradually phased out. The reason is because Prime Minister Modi’s government suspects that the high-denomination note is being used for hoarding, tax evasion and money laundering — the very reasons it replaced the demonetized 1,000- and 500-rupee notes two years ago in the first place. Instead, it made the things it was trying to prevent even easier.

The face of the current 2,000-rupee note features a portrait of Mahatma Gandhi and the Ashoka Pillar Emblem. The back depicts the Mars Orbiter Mission, or Mangalyaan, India’s first interplanetary spacecraft.

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