More than six years back, Prime Minister Modi appeared on national TV to announce that existing Rs 1000 and Rs 500 notes will be invalid, forcing citizens to scramble for replacing their cash in lines outside banks and ATMs. The currency was replaced by new Rs 500 notes, and pink, fluorescent Rs 2000 notes, which were also rumoured to have microchips as per overenthusiastic media analysis. But six years later, those eye catching notes are fading away from the cash pile, much like the government would want demonetisation to vanish from public memory.
How did demonetisation pan out?
If you are relieved about not having to run from pillar to post for change in the early days after demonetisation when ATMs pushed out mostly Rs 2000 notes, you can thank the Reserve Bank of India. The country’s banking regulator hasn’t printed the new currency welcomed with much fanfare from FY20-FY22, reducing its presence in the overall cashflow to a mere 13.8 per cent. Hence while a cashless economy or the end of black money still isn’t visible among other objectives of demonetisation, its only contribution to Indian economy is also being phased out.
Were the supposed objectives achieved?
Now the microchip in a Rs 2000 note turned out to be a dud, but apart from that it couldn’t stem counterfeiting and black money as well. In fact, 60 per cent of all fake notes seized in 2021 were Rs 2000 notes, and counterfeiting of this specific currency went up by 107 times since demonetisation. As for terror funding, while militants in Kashmir were found to have Rs 2000 notes within weeks of demonetisation, counterfeiting plays a major role in financing terrorism.
The details about RBI not printing Rs 2000 notes in the past two years were revealed in response to an RTI plea. Earlier in 2019, the government had dismissed reports that the currency would be taken out of circulation over concerns about its use for money laundering and tax evasion.
