The Government of India’s Ministry of Finance announced through a gazette notice that a new currency – an INR 200 rupee note will soon be issued by the Reserve Bank of India, the country’s central bank. “In exercise of the powers conferred by sub-section (1) of section 24 of the Reserve Bank of India Act, 1934 and on the recommendations of the Central Board of Directors of the Reserve Bank of India, the Central Government hereby specifies the denomination of bank notes of the value of two hundred rupees“, said the notification.
This is for the first time that currency of INR 200 denomination shall be introduced in the country. While the Finance Ministry has not yet specified a date for the introduction of these new notes, it seems likely that the banks will receive these for circulation within the next fortnight. Along with the INR 200 notes, the RBI is also likely to introduce a new INR 50 currency note. This shall, however, not be accompanied by any demonetization, meaning that the old INR 50 notes shall still be counted as legal tender. The newly introduced currency notes are likely to bear the signature of RBI Governor, Dr. Urjit R. Patel.
Bridging The Gap
Before the demonetization drive, there were some 9000 crore currency notes in circulation in India. The withdrawal of the INR 1000 and old INR 500 sucked out over 86 percent of the currency notes available at the time. INR 2000 notes were pumped into circulation in greater numbers than the new INR 500. News reports from the time claimed that India would take about 7 months to restore the liquidity that had been lost due to demonetization.
In the meanwhile, the people of India faced a new challenge – finding change i.e. small day-to-day purchases became an issue. The new notes were not quite adequately in circulation and household shopping became a great challenge. Over the months, the situation has been managed (particularly with the introduction of digital payments, online wallets, plastic currency etc.) but the problem has not yet been resolved effectively.
It is expected that the introduction of the new INR 200 notes will make life a lot easier for the ordinary people and for small time traders by helping cut down on the high demand of INR 100 and INR 500 notes.
Preventing Illegal Stashes
The Reserve Bank of India is keen to avoid the possibility of any black marketing of these currency notes and intends to build up a stock pile of about 50 crore notes (of INR 200 denomination) before sending them out for circulation. This will prevent ay scarcity, panic, or illegal trade involving these notes, says the RBI. Last year in November, there had been news reports of illegal hoarding of INR 2000 notes when they were introduced. The government and the RBI are keen to avoid any such incidence. This announcement of the introduction of INR 200 notes in great numbers also leads us to conclude that the decision to introduce this new currency must have been taken at about the same time as the demonetization. The government and the RBI are thus looking at this new note as another tool to prevent counterfeiting.
The circulation of counterfeit currency has been one of the biggest challenges faced by the government over the past few decades. In fact one of the main reasons the demonetization was undertaken was to weed out the fake or counterfeit high denomination notes in circulation. Not only do fake notes weaken the economy and dampen growth but are also the source of terror funding in the country. The new INR 200 notes are likely to carry advanced security features that will make it well-nigh impossible to be counterfeited, it is believed.
Another great advantage in the introduction of these new INR 200 notes is the prevention of untaxed black money. Tax evaders and black money hoarders prefer to stash large amounts of money in currency notes of higher denomination. The introduction of INR 200 instead of a new INR 1000 is likely to dissuade such practices as well.
All in all, as curiosity builds up about the colour and the design of the new INR 200 currency notes, the wait to find them in our purses and wallets may not be a long one.