P Chidambaram writes: Spin doctors at work

Perhaps taking a leaf from the IPL, opinion consultants are in high demand in the current BJP government and the institutions under its rule. The latest crop is in the RBI and among the ‘economists’ bowling for the government. A chance made in heaven presented itself on May 19, 2023 when the RBI announced that it would be “retiring” 2000 rupee notes. The advisers argued that this was not ‘demonetization’. Remember that in 2016 too, the notifications and circulars used the word ‘takedown’ and not demonetization.

Our minds went back to November 8, 2016. On that day, the Hon’ble Prime Minister dramatically announced on national television that the 500 and 1000 rupee notes were no longer legal tender. In one fell swoop, 86 percent of the currency in circulation was declared illegal. The consequence was CHAOS. It will do no good to remember those horrendous days.

defying logic

On November 8, 2016, the government also quietly slipped the decision to introduce the Rs 2,000 note. Advertising experts called the decision “remonetization.” People were learning a new word, demonetization, and the other new word, ‘remonetization’, blew their minds. Why would the government scrap the 500 and 1,000 rupee notes and simultaneously introduce the 2,000 rupee note? Why couldn’t the old banknotes be replaced by new banknotes of the same denomination but of a different color and size and with new features? The 2,000 rupee notes made no sense when compared to the three stated goals of demonetization: eliminating counterfeit notes, uncovering black money, and stopping the financing of drug trafficking and terrorism through counterfeit notes. Hoarders, drug dealers and terrorists happily welcomed the Rs 2,000 notes because it made their job easier.

Despite the government, the people refused the 2,000 rupee note. It was completely useless as a ‘medium of exchange’. Few merchants and fewer service providers were willing to accept the Rs 2,000 note. Within a few weeks, the 2,000 rupee notes virtually disappeared from daily routine transactions. However, the RBI continued to print and issue the Rs 2,000 note until 2018. It has now emerged that most of the Rs 2,000 notes were still in bank safes or vaults. The rest was, not in the hands of the millions of people who used cash, but in the hands of a fraction of the population. Why the Rs 2,000 note was introduced in the first place has not elicited a logical answer so far.

Why retire in 2023?

The logic-defying Rs 2,000 note also defies the next logical question: why was it withdrawn in 2023? According to the RBI letter to the banks, the Rs 2,000 note was introduced to “meet the immediate currency requirement of the economy” and it served its purpose! The common people of India did not “require” the practically useless 2,000 rupee note. They met their requirements by using lower denomination notes and the 500 rupee note which was inevitably reintroduced shortly after demonetisation.

There was no explanation why so many crores of Rs 2,000 notes were printed when people had avoided such notes. RBI’s further justification was that the lifespan of the Rs 2,000 note was only 4-5 years. If so, the lifespan of the lower denomination notes (10, 20, 50 and 100 rupees) should be shorter. Just as they are replaced with new notes from time to time, Rs 2,000 notes could also be replaced periodically. The more the story twists, the more trapped the doctors are in their own web of lies. And in the process, there is less faith in the integrity of the Indian currency.

Mr. KV Subramanian, the India-appointed Executive Director at the IMF, had the most astonishing explanation: It was to entice black money hoarders to keep their money unaccounted for in 2,000 rupee notes and, seven years later, pounce on them and dig up/seize their black money! That deserves the ig-Nobel prize for the strangest story invented by doctors. Mr. Subramanian’s true calling may be that of a science fiction author.

Red carpet for hoarders

Unfortunately, as soon as Mr. Subramanian put forth his outlandish theory, the SBI announced that the Rs 2,000 notes could be exchanged by anyone without proof of identity, without filling in any forms, and without proof of source. Many banks followed his example.

It is now absolutely certain that, as 99.3 per cent of Rs 500 and Rs 1,000 notes were returned in 2016, almost all Rs 2,000 notes in “circulation” will be returned to the RBI. The tribe of manipulation doctors will tell the story that after 7 years of herculean efforts, the almighty government of India has successfully unearthed all the black money in the country, put an end to corruption and defeated the drug dealers! drugs and terrorists and their financiers!

Advertising experts are licking their lips and waiting for the next big opportunity to prove that theirs is the best deal in town.