New Rupees 2000 Currency Notes Ignored by RBI? Denominations of 500, 200 and 100 are Popular Among Citizens

New Delhi, May 7: The Economic Affairs Secretary Subhash Chandra Garg has given an important statement on the currency crunch and situation in India. The Economic Affairs Secretary has said that the currency of 500, 200, and 100 denominations are comfortable modes for transactions. Speaking on the Rs 500 notes, he said that the government is printing notes of Rs 500 of about 3,000 crore everyday to meet extra demand.

Terming the cash situation in India as quite "comfortable", he added that extra demand for currency is being fully met and taken care by the government. Speaking to news agency PTI, Garg emphasized on the robustness of the Indian economy and said that the economic condition does not call for an interest rate hike at the moment. He asserted that there has not been any “disproportionate rise in inflation” or “extra ordinary growth in output”.

The Economic Affairs Secretary said that he had reviewed the cash situation in the country  and according to his review, he found 85 per cent of the ATMs were functional.

“Overall in the country, I think its (cash situation) quite comfortable. There is enough cash which is being supplied and there is extra demand which is being fully met. I don’t think there is any cash related crisis or problem at this point of time,” Garg said. On the issue of Rs 2,000 notes, he said that there are about Rs 7 lakh crore of Rs 2,000 notes in circulation, which is more than adequate and and so no new Rs 2,000 notes are being issued.

He said that the Rs 500, 200 and 100 rupee notes are easier to use for the people and called it the "people's medium of transaction." This is when he informed that the production of the Rs 500 notes have been taken to the level of about Rs 2,500-3000 crore a day. "People's need for transaction is being taken care of by these", he said on the extra printing of the currency.

Speaking on the RBI role he said that, "In last 2.5 years, there has been much less instances, almost non existent instances, of high quality fake notes being reported in the country. But still RBI keeps on reviewing, finding out, adding new features".

Asked about a monetary policy committee member favouring withdrawal of accommodative stance, he said: "We should go by what the real numbers are. Have you seen disproportionate rise in inflation numbers? Have you seen extra ordinary growth in output which has reduced the output gap substantially? No. So, one should go by the fundamentals and wait for next policy announcement".

The next meeting of MPC is scheduled on June 4-5. The six-member Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, had last month left the benchmark repo rate unchanged at 6 per cent for the third time in a row.

As per the minutes of the MPC meeting, RBI Deputy Governor Viral Acharya favoured withdrawal of monetary accommodation in the next policy review meet. The retail inflation in March slipped to a 5 month low of 4.27 per cent on account of decline in food prices.The RBI has revised downwards forecast for retail inflation to 4.7-5.1 per cent for April-September and 4.4 per cent for October-March.

Speaking on the RBI's preparedness for dealing with inflation, he said that, "If there is any real situation where inflation seems to overshoot, RBI does have a statutory mandate to keep the inflation around 4 per cent, so they would take the most appropriate steps for that. But is the situation there? That is the situation we need to see." The Economic Affairs Secretary's comment on the currency situation is surely assuring but it once again raises questions about the feasibility of Rs 2000 currency notes and the rationale behind introducing it after high denomination notes of Rs 500 and Rs 1000 were withdrawn by the Government of India after Prime Minister Narendra Modi's announcement on November 8, 2016. (With Agency Inputs)

(The above story first appeared on LatestLY on May 07, 2018 02:19 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).