Source: The post is based on the article “Why2k Question – Will withdrawing ₹2,000 notes smoke out the crooked? Unlikely. The crooked economy’s much more inventive” published in The Times of India on 22nd May 2023.
Syllabus: GS – 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Relevance: About RBI’s decision to withdraw Rs 2,000 notes.
News: The Reserve Bank of India (RBI) has decided to withdraw the Rs 2000 denomination banknotes from circulation.
Why has the RBI withdrawn Rs 2,000 notes?
|Must read: Why has the RBI withdrawn Rs 2,000 notes?|
What are the concerns highlighted by experts on RBI’s decision?
Creates confusion: The circular said the notes “will continue to be legal tender” while also telling the public to “utilise the time up to September 30 to deposit and/or exchange”.
Does not reduce the black market: People who play with very large sums of money does not depend only on bundles of currency notes. Gold is enjoying a superior premium ever since the pandemic. Further, black marketers also prefer dollars.
Does not address unaccounted cash: The recent SBI circular has said that none of its branches will ask for documents and there are reports that deposits/ exchanges by one person can happen several times a day, and any number of times till the deadline. This is not addressing the unaccounted cash holding.