27% of Rs 2,000 notes pulled back from circulation; printing stopped

In value terms, the share of Rs 500 and Rs 2,000 banknotes together accounted for 85.7 per cent of the total value of banknotes in circulation as of March 31, 2021 as against 83.4 per cent as on March 31, 2020

Anand Adhikari | Thursday, May 27, 2021 | 19:56 IST

The number of Rs 2,000 notes in Indian economy, which had reached its peak of 33,630 lakh in 2017-18, has reduced to 24,510 lakh in March 2021.

At its peak, the value of Rs 2,000 notes stood at Rs 6.72 lakh crore, which has now dropped to Rs 4.90 lakh crore.

The number of Rs 2,000 notes that have been removed from circulation stands at 9,120 lakh with a total value of Rs 1.82 lakh crore. This implies a 27% drop in number of Rs 2,000 notes from the peak of its circulation.

Where have all those Rs 2,000 notes gone?

The latest annual report of the RBI doesn't say anything about these missing notes. Clearly, the RBI has stopped printing new Rs 2,000 notes as these high-value notes are not coming back to the banks. People are also not getting as many Rs 2,000 notes in the ATMs as they would earlier.

There is a strong possibility that these notes are hoarded as black money because of their high value.

Even at the time of demonetisation, the estimates for black money were about Rs 4-5 lakh crore, which experts thought would not come back to the system.

In the last few years, the money in circulation has been growing at 10-12 per cent. The RBI has increased the number of other low value denomination notes in the market.

According to the RBI's annual report, the value and volume of banknotes in circulation increased by 16.8 per cent and 7.2 per cent, respectively, during 2020-21 as against an increase of 14.7 per cent and 6.6 per cent, respectively, witnessed during 2019-20.

In value terms, the share of Rs 500 and Rs 2,000 banknotes together accounted for 85.7 per cent of the total value of banknotes in circulation as of March 31, 2021 as against 83.4 per cent as on March 31, 2020.

Clearly, Rs 500 notes are replacing Rs 2,000 notes. In volume terms, Rs 500 denomination constituted the highest share at 31.1 per cent followed by Rs 10 denomination banknotes which constituted 23.6 per cent of the total banknotes in circulation as of March 31, 2021 .

The share of Rs 500 denomination banknotes in the total volume of banknotes showed an increasing trend from 19.8 per cent as on March 31, 2019 to 25.4 per cent as on March 31, 2020 and to 31.1 per cent as on March 31, 2021. The share of Rs 10 denomination banknotes in the total volume showed a declining trend from 28.7 per cent as on March 31, 2019 to 26.2 per cent as on March 31, 2020 and to 23.6 per cent as on March, 31, 2021.