No news on Rs 2,000 note ‘withdrawal’, Rs 200 to be issued soon: Gangwar

By Meghna Mittal

New Delhi, July 28 (IANS) With rumours of the Centre planning a withdrawal of the newly-introduced Rs 2,000 note doing the rounds, Minister of State for Finance Santosh Kumar Gangwar has said there was no news of its scrapping, adding the Rs 200 note will be in circulation soon.

"No news that Rs 2,000 will be scrapped," Gangwar told IANS in an interview.

"The reduction in printing of new Rs 2,000 notes is a separate issue. But that needs to be confirmed by the Reserve Bank of India (RBI). RBI will give information on Rs 2,000 notes," he added.

According to media reports, the government has stopped further printing of the recently printed Rs 2,000 notes.

On July 26, the issue was raised in Parliament when the opposition asked Finance Minister Arun Jaitley to confirm if the government was going to "demonetise Rs 2,000 notes" and if its printing had been stopped. The Minister declined to reply.

Industry experts said the government was aiming to limit the circulation of high denomination Rs 2,000 note, which would remain a legal tender, but not demonetise it. The circulation of smaller denomination notes would be increased by introducing a new Rs 200 note.

Gangwar told IANS that Rs 200 note, printing of which had already begun, would be in circulation soon. The move to introduce Rs 200 note was to increase the circulation of smaller denomination notes, he added.

A top government official, on condition of anonymity, told IANS that the Rs 200 note would be introduced in the markets in August.

"The paper for Rs 200 notes was ready in the Mysuru paper mill in June. It should be in circulation next month," the official said.

The Mysuru paper mill is joint venture of Security Printing and Minting Corp of India Ltd (SMPCIL) and Bharatiya Reserve Bank Note Mudran, a wholly-owned subsidieary of RBI.

The Rs 200 new note was being printed in the RBI printing press. India has four currency note printing pressess -- two RBI presses at Mysuru (Karnataka) and Salboni (West Bengal) and two Security Printing and Minting Corp of India Ltd (SMPCIL) presses at Nashik (Maharashtra) and Dewas (Madhya Pradesh). SPMCIL is a public sector unit.

Lauding the introduction of Rs 200 note, a State Bank of India (SBI) report recently said that it would serve as the "missing middle".

"It seems that there has been a significant move towards relocating distribution of currency towards smaller denominations post demonetisation. However, while such a move is laudable and consistent with the long term vision of a less cash economy, we need to consider the following issues.

"Though the number of small denomination notes has increased, the mismatch caused by the presence of Rs 2,000 denomination straight after Rs 500 denomination is causing difficulties in exchanging the high denomination notes," the SBI Ecowrap report noted.

Post-demonetisation, there were reports of people facing problems in using the Rs 2,000 note as sufficient quantum of smaller denomination notes of Rs 100 and Rs 500 were not available.

The government had brought in the Rs 2,000 note immediately after November 8, 2016 demonetisation to expedite remonetisation.

The economy is now close to complete remonetisation as the new currency in circulation reached 84 per cent of the extinguished one on July 7, according to the SBI Ecowrap report.

The total amount of the spiked high value denomination notes of Rs 500 and Rs 1,000 in circulation on November 8 was 15.44 lakh crore.

(Meghna Mittal can be reached at meghna.m@ians.in)