New Delhi: India's 2,000 currency notes in circulation fell by a third in absolute numbers and more than half in value over the last 44 months. The Finance Ministry informed Rajya Sabha in a written reply on Tuesday that the reason was that no fresh indent to print was placed for the denomination since 2018-19, and notes went out of circulation due to spoilage.
The share of 2,000 notes in circulation has fallen though the currency in circulation has risen over 62 per cent through the last five years from Rs 17.74 lakh crore on November 4, 2016, to Rs 28.78 lakh crore on November 19, 2021. Minister of State in Finance, Pankaj Chaudhary, has told the Rajya Sabha that 3,363 million pieces of Rs 2000 currency notes were in circulation on March 31, 2018.
It constituted 3.27 per cent of notes in circulation in terms of volume and 37.26 per cent in value. As of November 26, 2021, the circulation of the denomination came down to 2,233 million pieces which constituted 1.75 per cent in volume and 15.11 per cent in value.
The minister further said that printing of banknotes of a particular denomination is done after the government consults the Reserve Bank of India so that desired denomination mix is maintained to facilitate transaction demands of the public.
Choudhary said in another reply that demand for currency depends upon factors like economic growth and level of interest rate. The Covid-19 had caused an increase in demand for it in FY21. The need for cash and GDP contraction has led to the rise in the currency in circulation. However, year-on-year growth in currency in circulation has decelerated to 7.9 per cent in November from 22.2 per cent a year ago, he added.
The Union government demonetised Rs 500, and Rs 1000 banknotes prevailed in November 2016, with objectives including curbing clack money. Following the demonetisation, a Rs 2,000 note and a new series of Rs 500 notes were introduced.