#211 Of Motives and Presumptions

<p>India Policy Watch #1: Silly Season Is Upon Us</p><p><em>Insights on issues relevant to India</em></p><p><em>— RSJ</em></p><p>Late on Friday this week, the RBI issued a circular withdrawing the circulation of ₹2000 denomination banknotes. The RBI clarified that these notes would continue to serve as legal tender, so this isn’t another demonetisation. Here’s the <a target="_blank" href="https://indianexpress.com/article/business/rbi-withdraw-rs-2000-note-8618730/">Indian Express reporting</a>:</p><p>THE RESERVE Bank of India (RBI) Friday announced the withdrawal of its highest value currency note, Rs 2,000, from circulation, adding that the notes will continue to be legal tender. It said the existing Rs 2,000 notes can be deposited or exchanged in banks until September 30, but set a limit of “Rs 20,000 at a time”.</p><p>“In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, exchange of Rs 2,000 banknotes can be made up to a limit of Rs 20,000 at a time, at any bank starting from May 23,” it said.</p><p>“To complete the exercise in a time-bound manner and to provide adequate time to the members of the public, all banks shall provide deposit and/ or exchange facility for Rs 2,000 banknotes until September 30, 2023,” the RBI said.</p><p>The RBI circular and the press note also attempt to make a convincing, logical case for this decision. There appear to be three reasons for doing this.</p><p>Thanks for reading Anticipating the Unintended! Subscribe for free to receive new posts and support my work.</p><p><em>One</em>, the ₹2000 denomination notes seem to have served their useful purpose. They were introduced in November 2016 when the legal tender status of existing ₹500 and ₹1000 banknotes in circulation were withdrawn. Looking back, it appears these were introduced to help re-monetise the economy really quickly, which was under the stress of not having adequate new legal tender banknotes. According to the RBI, after this task of re-monetising was completed, the