Prime Minister Narendra Modi was not in favour of Rs 2000 notes coming into circulation but reluctantly agreed to it after he was told that there was a lack of capacity to print smaller currency notes as demonetisation has to be done in a limited time, Nripendra Misra, former Principal Secretary to PM Modi has said.

Nripendra Misra told ANI in an exclusive interview that PM Modi never considered Rs 2000 note as that of the poor and knew “Rs 2000 note has hoarding value instead of transactional value”. “PM Modi was not at all in favour of Rs 2000 notes. But, as demonetisation was to be done in a limited time, he gave reluctant permission for it…PM never considered Rs 2000 note as note of the poor, he knew Rs 2000 (note) has hoarding value instead of transactional value,” Nripendra Misra said.

He said PM Modi was not in favour of currency notes being printed outside the country.

Misra said it was decided during the demonetisation exercise, carried out in November 2016, that the currency notes that had been taken out of circulation (Rs 500 and Rs 1000) had to be replaced with new notes in a given period of time.

“In the period that the (demonetised) notes were to be deposited and new notes brought out, the capacity to print (new notes) was less and the option was to bring Rs 2000 note. The team that was working made the proposal that Rs 2000 notes will have to be printed in the wake of limited time. The Prime Minister was not at all enthused,” Misra said.

He said PM Modi felt that the effort was to tackle black money and if a bigger denomination note comes then the capacity to hoard will increase.

“When he was told about the capacity to print currency notes, and that even if two-three shifts are held, the target cannot be met..the only alternative left was to print Rs 2000 note for a limited period…the Prime Minister, in principle, was against it but for practical considerations, he reluctantly agreed. There was not an iota of doubt in his mind that when there is adequate capacity in the future, Rs 2000 note should be discontinued,” Misra said.

“You would have observed that Rs 2000 notes were not being printed since 2018,” he added.

Misra, who was Principal Secretary to PM Modi from 2014 and 2019, said that RBI has also not been bringing back to circulation “soiled” Rs 2000 notes that came to it from banks.

He said RBI has now announced that Rs 2000 note is being withdrawn from circulation and people can exchange it till September 30 in bank branches.
Misra said PM felt that Rs 2000 is not for the common man and can somewhere contribute to hoarding if it is not deposited in banks.

He said the government has been engaged in the fight against black money. RBI has also said Rs 2000 denomination banknote was introduced in November 2016, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time.

The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2000 banknotes was stopped subsequently in 2018-19.

The total value of these Rs 2000 banknotes in circulation has declined from Rs 6.73 lakh crore at its peak in March 31, 2018 (37.3 per cent of Notes in Circulation) to Rs 3.62 lakh crore constituting only 10.8 per cent of Notes in Circulation on March 31, 2023.

The Reserve Bank of India (RBI) on Friday decided to withdraw the Rs 2000 denomination currency notes from circulation, but added they will continue to remain as legal tender. RBI had advised banks to stop issuing Rs 2000 denomination banknotes with immediate effect.

RBI, however, said that citizens will continue to be able to deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch up to September 30, 2023.

The exchange of Rs 2000 bank notes into notes of other denominations can be made upto a limit of Rs 20,000 at a time at any bank starting from May 23, 2023.