From the last some months, the shortage of Rs 2,000 notes has stumped the bankers and ATM operators in many parts of the country and the reason behind this is suspected as the heavy usage of money in election campaigning. The Bankers and service providers confirmed that there has been a sharp drop in the numbers of Rs 2000 in circulation. It is also believed that the supply of notes from the central bank has plummeted in the recent month leading to the speculation that it could be a deliberate strategy to restrict the flow of high-value notes in the economy. You may not get Rs 2,000 notes from the bank ATMs in the next few months. However, a report on the present cash crush also claimed that people are able to get Rs 2,000 notes only at ATMs run by banks. It too quoted officials as saying that politicians have started hoarding Rs 2,000 notes ahead of the general elections.
The Reserve Bank of India (RBI) data says the circulation of Rs 2,000 notes has seen a sharp fall in the past year. It is believed that the central bank is squeezing the supply of Rs 2,000 notes to prevent black money hoarding high denomination. However, people believe that the currency notes of higher value are easier to hoard, and can also be used to proliferate black money. Moreover, the experts said that having a large number of Rs 2,000 notes in circulation would have defeated the purpose of demonetisation, which was to stop the circulation of black money.
In its annual report released in August 2018, the RBI said that the proportion of Rs 2,000 notes has fallen to 37 per cent in the circulation of the total currency from 50 per cent in 2017. The indent for the Rs 2,000 notes also fell from 350.4 crore pieces in 2016 to 15.1 crore in 2017-2018. It was reported to be an acute shortage of cash in April 2018 and the government suspected that the cash may have been hoarded ahead of the state elections and in the aftermath of Nirav Modi scam. During the same period, the income tax department seized massive amounts of Rs 2,000 notes.
Senior Congress leader Manikrao Thakre expressed, “Since BJP introduced Rs 2,000 denominations post the demonetisation, the Rs 2,000 notes has been diminishing from the market over the time gradually, and now, as the Lok Sabha election is approaching, it seems to be totally out of the market. I think that the leaders and the business friend of PM Modi have hoarded the high “denomination notes.”
He further added, “Shiv Sena and BJP are hoarding the high currency notes to buy votes in both the Lok Sabha and state elections. The democracy of the country is in danger under the PM Modi-Shah leadership and we must fight against it.”
The government had introduced Rs 2,000 along with new Rs 500 notes in November 2016 to replace the demonetised Rs 1,000 and Rs 500 notes. After the demonetisation, the government collected 85 per cent of the old currency notes from the economy. However, the circulation of Rs 500 note increased to 43 per cent from 23 per cent a year before. In value term, the currency increased to 15.1 per cent from 5.9 per cent a year before. 2016-17 was an exceptional year on account of demonetisation and the after effects continued in 2017-18 as well, said the RBI report, adding that the overall indent for 2017-18 was higher by 9.1 per cent as compared to last year. The value of total banknotes increased by 37.7 per cent in circulation over the year to Rs 18 lakh crore by March 2018, however, the volume of banknotes increased by 2.1 per cent.
According to the RBI, its currency management infrastructure consists of a network of 19 issues offices, 4034 currency chests and 3707 small coin depots of, cooperative, commercial, and regional rural banks spread across the country. It follows the hub and spoke model for the distribution of bank notes. Under this arrangement, fresh note remittances are sent to larger currency chests to meet the currency needs of a designated area like district. Now, the distribution model is in place, the distribution centre is in place and a scientific estimation method of future needs is also in place. So what is the reason for the present crisis?
The shortage of Rs 2,000 notes in the ATMs is not only confined to a particular region. It is widespread fairly. As reports suggest, the shortage of notes are reported from Delhi, Uttar Pradesh, Bihar, Telangana, Andhra Pradesh, Maharashtra, Karnataka, and Jharkhand. According to the Finance Ministry officials, in recent months, the unusual demand for cash has given a push to the crisis of high denomination in the market. However, the unusual demand has not been clarified.
Maharashtra Minister of Finance and Forest Sudhir Mungantiwar said, “Circulation of Rs 2,000 notes in the market are continuous. The Opposition leaders are making an issue out of this so that they can get the attention of the voters. May be it is Congress that is hoarding all the money and targeting the BJP leaders. Congress is an expert in hoarding black money. I, as the Finance Minister of the State, can affirm that high-currency notes are not missing from either the market or the ATMs.”
While announcing the demonetisation in 2016, Prime Minister Narendra Modi said that his decision will curb black money; however, people questioned his decision pointing out that even the launch of new Rs 2,000 notes doesn’t make any sense. Citizens argued if the government was convinced that a high denomination currency note of Rs 1,000 helped the hoarders of black money then how would it be tough for them to hoard Rs 2,000 notes? However, the government did not answer the question.
NCP MLA Shashikant Shinde said, “During the 2014 elections, promises were made through social media and people expected that some change will occur. However, the scenario is different when it comes to the 2019 Lok Sabha polls. The government has failed to meet the expectations of the people; unemployment is rising and agricultural sector is in distress. The government had made several announcements and metro projects were launched in big cities. It is unfortunate that democracy is under threat. The missing of Rs 2,000 notes suggests that the currency is being used for election. Demonetisation decision was taken ahead of Uttar Pradesh assembly polls. The government machinery is being used to win election.”