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    Published On : Fri, Jul 28th, 2017

    Demonetisation again??

    Exchange of old notes
    New Delhi: Is a second round of demonetization being planned again by Government? The writing on the wall seems to indicate that clearly.

    Many observors believe the Rs 2,000 note will be scrapped. The issue came up in Parliament too.

    Some Opposition M.P.s in Rajya Sabha asked Finance Minister Arun Jaitley to clarify whether the government has decided to scrap the newly launched Rs 2,000 note. Jaitley refused to reply or give any clarification despite opposition insisting on it.

    But meanwhile, supply of Rs 2,000 notes from the RBI has declined. There might be a deliberate plan to limit the supply of these notes. The RBI rushed to print Rs 2,000 notes immediately after demonetization was announced in November last year and that supply may have reached a level that the central bank is not comfortable with now. The reason is obvious: this value note makes it easier to hoard money! This may be a conscious strategy to curb the new supply of high-value notes and print more low-value notes.

    There are reports that the Reserve Bank of India has stopped printing the Rs. 2000 note.

    What has further fueled rumours of another round of demonetisation is the government launching Rs 200 note. With more Rs 200 and Rs 500 notes in circulation, the common people will not be impacted much by a ban on the Rs 2,000 note. The ban will be an effective step against black cash as demonetization of Rs 2,000 currency note will hit hoarders more than the masses.

    Rs 2,000 note had an important purpose when it was launched after demonetisation in November 2016. It was meant to ease cash crunch though the high value note was cumbersome to use.

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