Where are Rs 2,000 notes slowly disappearing? If RBI is killing pink bills, it’s good news for economy

The Rs 2000 bills, which were introduced after the note ban shocker in November 2017 have always been a nightmare to the common man as it was difficult to transact using those pieces (smaller denomination notes were not available easily around to break it). After one year of demonetisation, why we don’t see too many of these pink notes around? An SBI research report may have an answer to this conundrum. According to the report authored by SBI group chief economic advisor, Soumya Kanti Ghosh, the Reserve Bank may have stopped printing the Rs 2,000 notes altogether or may be printing far less numbers focusing on smaller currencies.

First, let’s look at how did the SBI report arrive at this conclusion. It first cites the information given by the Ministry of Finance in the Lok Sabha that the Reserve Bank of India (RBI) has printed 16,957 million pieces of Rs 500 notes and 3,654 million pieces of Rs 2,000 notes as on 8 December. Total value of such notes translates into Rs 15,787 billion.Now it takes another set of data (from RBI) which is the currency in circulation on the same date (8 December) and subtract the value of small value notes up to March, 2017 provided in the RBI annual report from it (Rs 16,825 billion-Rs 3501 billion). Thus, it arrives at the value of high denomination notes in circulation at Rs 13,324 billion as on 8 December.Now, taking the difference of the value of total printed high denomination currency as on 8 December (Rs 15787) and the total value of high denomination notes in circulation, the SBI reports arrives at a figure of Rs 2463 billion, ‘which may have been printed by the RBI but not supplied in the market.’ According to the report, even this Rs 2,463 billion may be on the lower side.