Before the announcement of demonetisation, the government had already arranged for the printing of 200 crore (2 billion) Rs 2,000 notes, or roughly about Rs 4 lakh crore ($60 billion) in value. So, these were the first set of notes to be circulated. This is why there are so many pink notes in circulation.
Let’s explore the time to disburse in the two scenarios we mentioned:
Rs 9 lakh crore (or roughly two-thirds the total Rs 14 lakh crore that was demonetised) needs to be returned to the system.
Rs 14 lakh crore (full amount) needs to be recirculated
For this amount to be liquid, a key condition needs to be met: Rs 2,000 notes can, at most, account for half the total amount to be circulated. The logic: If we do not have enough change, then the Rs 2,000 note will always be hard to “break” into smaller denominations, which is the situation nationwide today.
The other half needs to be available in lower-denomination notes. The total value of Rs 100, Rs 50, Rs 20, and Rs 10 notes is Rs 2.19 lakh crore ($33 billion), according to the RBI’s annual report.
(Sourced from agencies, feature image courtesy:oneindia.com)
