Measure will not cause significant changes, says government; population has until September to exchange banknotes for smaller amounts
The Central Bank of India announced this Friday (May 19, 2023) that it will begin withdrawing the 2,000 rupee banknotes from circulation – the highest current value banknote. The country’s finance ministry claims that the measure will not cause significant changes “Not even in normal life [da população]no in the economy”. The information is from Reuters.
The banknotes in circulation will remain valid, but the population must deposit or exchange the banknotes for smaller values until September.
The announcement took place before the elections that will take place in the country in 2024. The suspicion is that most parties were accumulating cash in high-value notes to finance election campaign expenses and circumvent the spending limits imposed by the Indian Electoral Commission .
The 2,000 rupee note was introduced in 2016 after the 500 and 1,000 rupee notes were withdrawn from circulation to ease the rise in counterfeiting.
However, the abruptly implemented measure created a cash shortage and forced the government to resume issuing banknotes.
In the past 4 years, to circumvent the currency shortage, the central bank of India has mainly focused on printing 500 rupee notes and has not printed any new 2000 rupee notes.