Rs 2,000 denomination now 15.1% of total value of notes in circulation | Business News,The Indian Express

Clipped from: https://indianexpress.com/article/business/banking-and-finance/rs-2000-denomination-now-15-1-of-total-value-of-notes-in-circulation-7661448/

The share of Rs 2,000 notes in circulation has fallen even as the currency in circulation has risen over 62 per cent over the last five years from Rs 17.74 lakh crore on November 4, 2016 to Rs 28.78 lakh crore on November 19, 2021.

On November 8, 2016, the government decided to demonetise the then prevailing Rs 500 and Rs 1,000 banknotes to curb black money, among other objectives.

The number of Rs 2,000 currency notes in circulation fell by a third in absolute numbers and by more than half in value terms over the last 44 months as fresh indent has not been placed for printing since 2018-19 and also notes went out of circulation due to soilage.

The share of Rs 2,000 notes in circulation has fallen even as the currency in circulation has risen over 62 per cent over the last five years from Rs 17.74 lakh crore on November 4, 2016 to Rs 28.78 lakh crore on November 19, 2021.

In a written reply in the Rajya Sabha on Tuesday, Minister of State in Finance Ministry Pankaj Chaudhary said that as against 3,363 million pieces (mpcs) of Rs 2,000 denomination banknotes in circulation on March 31, 2018 — constituting 3.27 per cent and 37.26 per cent of notes in circulation (NIC) in terms of volume and value, respectively — 2,233 mpcs were in circulation on November 26, 2021 — constituting 1.75 per cent and 15.11 per cent of NIC in terms of volume and value, respectively. Pointing out the reason, he said, “The decrease in circulation of Rs 2,000 note issued after demonetisation is because no fresh indent has been placed for printing of these notes from 2018-19 onwards. Further, notes also go out of circulation as they get soiled/mutilated.”https://images.indianexpress.com/2020/08/1×1.png

He added that printing of banknotes of a particular denomination is decided by the government in consultation with the Reserve Bank of India to maintain desired denomination mix for facilitating transactional demand of public.

On November 8, 2016, the government decided to demonetise the then prevailing Rs 500 and Rs 1,000 banknotes to curb black money, among other objectives.

Following demonetisation, a Rs 2,000 note and a new series of Rs 500 note were introduced. Later, a banknote of denomination of Rs 200 too was introduced.

In another reply, Choudhary told Parliament that demand for currency depends upon several macro-economic factors, including economic growth and level of interest rate. Precautionary demand generated by public during FY21 due to Covid-19-induced uncertainties is also an important factor in currency demand.

“Combination of greater public demand for cash and a contraction in GDP has led to an increase in Currency in Circulation (CiC) as percentage of GDP from 12 per cent during 2019-20 to 14.5 per cent during 2020-21,” Choudhary said. However, year-on-year growth in CiC has decelerated sharply to 7.9 per cent as of this November from pandemic influenced surge to 22.2 per cent a year ago, he said.

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