Printing of Rs 2,000 notes stopped amid fear of tax evasion, money laundering, say sources

Jan 04, 2019, 09:00 IST | Agencies

The income tax department also reported massive seizures of '2,000 notes during this period. The RBI did not respond to an email from ThePrint seeking a comment

Printing of Rs 2,000 notes stopped amid fear of tax evasion, money laundering, say sources
Pic for representation

In the wake of suspicion in the Narendra Modi government that the Rs 2,000 notes were being used for hoarding, tax evasion and money laundering, the nation has stopped printing the high-denomination notes to reduce their circulation, a highly placed government source told ThePrint. However, this doesn't mean that the '2,000 notes would become invalid, but they would be gradually phased out.

In November 2016, after the government demonetised '1,000 and '500 denominations, the '2,000 note was introduced to counter the cash shortage. As of March 2018, the total value of the currency in circulation was '18.03 lakh crore, of which '6.73 lakh crore, or 37 percent, was in '2,000 notes, and '7.73 lakh crore, approximately 43 percent, in '500 notes. Following the introduction of the '2,000 note, the government was severely critisised.

Opposition parties said that the notes would help money launderers and tax evaders. These fears became a reality last April when a number of cities faced cash shortage. The government suspected cash hoarding ahead of state elections. The income tax department also reported massive seizures of '2,000 notes during this period. The RBI did not respond to an email from ThePrint seeking a comment.

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