2000 NOTE TO EXIT. IS IT MODI’S STRIKE AGAINST VOTE BUYERS?

This year, politically major states in India like Madhya Pradesh, Chhattisgarh and Rajasthan are scheduled to go for the state assembly polls. The next year is ofcourse much bigger with general Lok Sabha elections 2024 with some most prominent states like Maharashtra also going for polls. But, early reactions predict, all these polls won’t be the same as they used to be, prior to May 23.

The biggest denomination currency note is being officially withdrawn, according to the RBI. The note was anyway hard to find in ATMs for several months. The users were being made to carry wades of bundles with ₹ 500 and 200 notes. It was widely predicted that the ₹ 2000 note would make a surprise exit. However, the RBI made things clearer on May 20th 2023. The users have been asked to exchange the two thousand rupees notes or deposit them in their accounts. The notes will however continue to be legal tender for a while.

Economic experts say, the printing of this note was stopped way back in 2018-19, hence another demonetisation on these lines was expected since then. The decision may appear delayed due to the Covid pandemic that continued till early 2021 and impacted the global economy as also the domestic scenario.

They further add that, the heavy cash transactions as during bribe taking or during black money transfer as in real estate deals or through Hawala channels would sorely miss their star. Its absence will be felt by the Political parties or poll candidates who love to offer big currency notes to attract gullible voters. The short cut will now involve a more cumbersome number of notes for votes. Such short cut routes to literally buy votes will feel the pinch. Some political parties or political leaders have already made, for whatever reasons, their dislike public.

The two thousand rupee notes were released in November 2016, after the demonetization of the rupee one thousand and rupees five hundred notes, in use then. Most of the two thousand rupee notes in the market now, may have been used to procure gold or a foreign currency, predict some of the market pundits.

The currency notes are stacked by cash dealers and Hawala operators. Obviously a heap of big denomination currency notes is much smaller though carrying much bigger value. And hence, much easier to handle or to transport. Now more suitcases would be needed and it would become more challenging for the black money operators to keep these out of the general public’s view.

As the date of polling nears, the election commission representatives and police teams raid or intercept people or vehicles on tip offs or on suspicion. At occasions like these, the currency found mostly consists of high denomination notes. There have been several instances pointing to the heavy use of high denomination notes during the electioneering in India.

However, will it route out corrupt practices, like under the table cash transactions? No, say the market observers in India’s financial capital, Mumbai. It would be naïve to even think so. But, the absence of the biggest note would mean taking comparatively many more notes of smaller denominations or opting for transactions via gold or a foreign currency such as the dollar. The common citizens are likely to remain largely unaffected.

 

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