What will be the impact, if the Reserve Bank of India withdraws the Rs.2, 000 currency notes, which the apex body had introduced as early as November 2016 after demonetizing Rs.500 and Rs.1, 000 banknotes? As it is, when the Rs.2, 000 bank notes were introduced immediately after the demonetization, people suffered a lot by standing in serpentine queues that too with limited transactions. Then, the RBI released Rs.500, Rs.200 and other denominations liberally, which made the lives of the people a little bit easier. Apparently, the effort of the Union Government led by the BJP was to flush out the unaccounted cash or black money.
Whether the Government achieved the desired results or not is a bone of contention, nevertheless, Rs.2, 000 has now become the most sought out bill for hoarders who are using this high denomination notes in order to stash unaccounted cash. On November 19, 2019 the Union Finance Minister, Nirmala Sitharaman had said on the floor of Rajya Sabha that an estimated 43.22% of unaccounted cash seized in this fiscal till the time of her speech was in the form of Rs.2, 000 notes.
Boost To Black Economy
According to the Minister, the level of unaccounted cash was in excess of 60% in the previous fiscal years such as FY 2018 and FY 2019, thus giving clear indication that there was a perceptible dip in the attraction for the note. Similarly, in the first full FY after the demonetization (FY 2018), around 67.91% of unaccounted cash constituted Rs.2, 000 notes, while it was further lower at 65.93% in the FY 2019; the Minister briefed the Upper House.
Nirmala Sitharaman further added that though the trend pointed out that the percentage of Rs.2,000 notes seized was on decline, nevertheless, it had raised questions again, whether high value currency was encouraging hoarding and further gave a boost to black economy. In fact, the Minister quoted the data she had received from the IT Department on the basis of an analysis of cases of cash seizures in excess of Rs.5 crore during the past three fiscal years, Sithraman said and added that in order to bring transparency in the source of funding to political parties, the provisions of section 13A of the IT Act had been amended to inter-alia provide that no donations of Rs.2,000 or more could be received otherwise than by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account or through electoral bonds.
Cash Seizure From Swaminarayan Temple
On November 24, 2019 the Surat Crime Branch sleuths organised surprise raids across Gujarat. In the crackdown, five persons were rounded up from various locations and seized fake currency notes worth Rs.1 crore. Further, the police arrested Pratik D. Chodvadia, one of the accused from Kamrej in Surat. The 19-year old Chodvadia was booked based on a tip-off. Apparently, the police confiscated 203 fake currency notes of Rs.2, 000 denomination worth Rs.4.06 lakh in addition to a mobile phone worth Rs.35, 000 and a car valued at Rs.5 lakh. Upon interrogation, Chodvadia admitted that he was part of racket gang who printed and distributed fake currency notes from a room inside the premises of a Swaminarayan Temple at Ambav Village in Kheda District of Gujarat. More fake currency notes and currency printing machine were confiscated in the temple’s room.
As per IANS report, while the Finance Minister did not outline any plan with regards to the future course of action for the high value currency, nevertheless, several FM officials had told the news agency that some action was needed in order to prevent misuse of Rs.2,000 note.
– Jayashankar Menon