RBI, please stop playing with currency notes!

Rs 2,000 notes

Rama Krishna Sangem

Stop playing with currency notes!” we tell our children. But, this is what our RBI – Reserve Bank of India -is doing now. If the previous demonetization of 2016 November was handled by the PM, this mini or mild DeMo 2 is run by RBI, thus creating an impression that is an economic measure or a must for our economy.

Rs 2,000 notes scrapping by September 30 this year has definitely created panic among people, not just who possessed such notes, but all others who don’t – as none understands the real purpose of the decision.

RBI governor Shaktikanta Das press meet on May 22, Monday, created more confusion, than clearing it. He said, the fate of Rs 2,000 will be decided only a few days before September 30, the deadline to exchange the notes. Governor Das said, “We never said, Rs 2,000 notes are not legally valid notes”.

That means, he failed to explain why these notes had to be withdrawn from circulation by September 30. He said the share of these notes is just around 10 per cent – around Rs 3.62 lakh crore, in a cash pile of around Rs 33 lakh crore worth of notes in the country. Everyone is giving their own interpretation to the Rs 2 k notes scrapping. Clean note policy explanation too is not convincing. Still we get many soiled or old Rs 100 notes from ATMs. 

If the share of Rs 2,000 notes is so small, why withdrawn them? Does RBI mean, entire black money in India is held only by those who had these notes? Or if Rs 2,000 notes are taken out, the problem of black money will be solved? 
There are no clear answers to these questions.  As a rule, most Indians think, those who have big notes Rs 2,000  are either corrupt or holders of black money. Bad guys. 

This may not be true. If a person with black money has Rs 2,000 notes, it will not be difficult for him or her to change the amount into other denominations – Rs 500 or Rs 200 notes. Whether an amount of money is black or white is decided by the tax paid on it, not because is it held in a particular form of currency – Rs 2,000 notes or Rs 500 notes. 

General belief in our country is that only super rich, rich and black moneyed people stock Rs 2,000 notes. Suppose, if a big contractor or a minister stocks his black money in Rs 2,000 notes, will it be difficult for him to do the same in Rs 500 or Rs 100 notes? Maybe they occupy more space, that’s all. But, the nature of the amount will not change.

Moreover, RBI hasn’t stated whether this periodic scrapping of big notes s part of a strategy to eradicate black money in our country. It’s like frequently setting our house on fire to kill rats. There are many other better ways to tackle black money. Demonetization is a way of admitting inefficiency of our Income Tax department or ED.  

Unfair to suspect everyone as black moneyed

Governor Das’ statement also indicates the lack of clarity on the part of the Centre and RBI on this issue. “We will take a decision on what to do with Rs 2,000 notes, by September 30, after seeing how many notes will come back to banks,” he said. He also said, RBI will keep the problems of those who are abroad to exchange the notes by September 30.

That means, RBI may extend the deadline further or relax norms for those who carry these notes. The deadline of September 30 is fixed to create some urgency among people, said Das. His statements make us doubt the very purpose of this Rs 2,000 notes withdrawal. The RBI could have allowed market dynamics take their own course – like the fate of 50 or 25 Paise coins which naturally disappeared from the system. Why create panic among people on Rs 2,000 notes?

Is it to create an impression that RBI or the Centre is waging a war against black money? If so, there are many other effective ways to do that. Otherwise, better RBI stop playing with our currency notes, for every few years. Will someone tell this Governor Das? 

Rama Krishna Sangem

Ramakrishna chief editor of excel India online magazine and website

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Rama Krishna Sangem

Excel India national news magazine is a media startup founded and piloted by Rama Krishna Sangem, a Hyderabad based senior journalist with over three decade experience in the field of media, mostly in print journalism. His rich experience in reporting for both Telugu and English newspapers and heading a TV news channel and some online outfits will be of immense use to this venture. Excel India English news magazine seeks to fill the gap of analytical understanding to our readers who today are confronted with myriad media platforms. Our online version not only offers regular updates and commentary on happenings around us, but also gives larger stories not limited by space constraints of a print magazine. Excel India is ably run by a team of senior journalists committed to values and quality standards in the profession. We urge you all to support and guide us in this endeavour. Reach us at excelindiaweb123@gmail.com