MUMBAI: Is it the end of the road for the Rs 2,000 note? Going by the latest data, that possibility now appears certain. The RBI’s FY18 annual report released Wednesday offers three startling figures — related to volume, value and printing — all of which indicate that conscious efforts are afoot, if not to phase out the country’s largest denomination currency, then at least to limit its share in the overall currency mix.
Why? The Rs 2,000 note had an important purpose when it debuted after demonetisation in November 2016, which was to ease the shortage of money supply. Now, that supply may have reached a level that the central bank is uncomfortable with, as high-value notes are easier to hoard. Hence, the efforts to purge, by printing more lower denominations including Rs 200. In terms of volume, little or no new pink notes were printed and circulated in the past 12 months with the share of Rs 2,000 notes to the total currency mix remaining unchanged at 3.3 per cent in FY18 over the previous year.
Shockingly, this flat growth is also a first in at least 20 years! The Rs 1,000 note, which was until 2016 the highest denomination, never recorded a muted growth either in volume or value since 2001, when it was reintroduced. In absolute numbers, a piffling 78 million new pieces of Rs 2,000 note found their way into the system (which is why the volume growth was flat in FY18) as against 9,587 million pieces of Rs 500 notes that RBI pumped last year, reflecting that Rs 500 note could be the cornerstone of our currency mix.
Secondly, in terms of value, the pink note’s share to currency in circulation fell to a three-year low of 50.2 per cent in FY17 to 37.3 per cent in FY18.In fact, RBI appears to be reducing overdependence on high-value notes — Rs 2,000 and Rs 500 — whose share stood at 80 per cent of the total currency in FY18, which itself is a seven-year low!
Lastly, the annual report also reveals that the central bank literally stopped printing Rs 2,000 notes altogether, which appears to be a deliberate move to limit its supply. For instance, RBI sharply reduced the indent (order) and supply of Rs 2,000 notes in FY18 to just 151 million pieces, a staggering 95 per cent reduction over the previous year’s indent of 3,500 million pieces.