By Tanmay Chhaparia
It has been almost 3 months since demonetisation came into effect and old Rs. 500 and 1000 notes were banned. New Rs. 500 notes have been printed but we are yet to have new Rs. 1000 notes in our pockets. Many of us still struggle to buy commodities whose price ranges from Rs. 1000 to Rs. 1500 due to lack of notes in denominations of 1000. For buying such commodities one needs Rs. 500 notes (which is available in scarce quantities) or arrange for 100 rupee notes.
[su_pullquote align=”right”]India is the only country with such a major difference between it’s highest and second highest denomination currency notes.[/su_pullquote]
India is the only country with such a major difference between it’s highest and second highest denomination currency notes. Many of us wonder as to why the government is doing nothing to solve this problem? But there is indeed a very distinct justification to it.
One must not forget that the process of demonetisation is still ongoing. Even today, people are depositing the demonetised notes with the RBI. This process will continue till 30 March 2017.
Measuring success
A plausible reason explaining the government’s delay in re-introducing new Rs. 1000 notes is to understand the benefits and degree of success of the scheme. The RBI knows the amount of Rs. 1000 notes it had issued to the public. That amount is its liability towards the people.
When the announcement regarding demonetisation was made by Narendra Modi, this liability was erased off.
From then, RBI was only liable to the amount of Rs. 1000 notes deposited in the banks and not which is circulating in the economy.
When Narendra Modi announced demonetisation of Rs. 1000 notes, the liability of the RBI towards public was erased off. I Photo Courtesy: IB India Times[su_pullquote]Therefore, the new/fresh liability of RBI will always be lesser than the old liability.[/su_pullquote]
Due to non-disclosure of incomes, not everyone can deposit their money with the RBI. Therefore, the new/fresh liability of RBI will always be lesser than the old liability. That difference is the net gain from demonetisation. But had the government introduced Rs. 1000 notes, it would have been tough to calculate this net gain as in a way the RBI would have itself produced fresh liability of Rs. 1000 notes during the deposit period.
The next obvious question is: When can we have Rs. 1000 notes?
We can expect Rs. 1000 notes in our lockers after March 30 when the deadline to deposit old notes lapses. It is at that time that government can easily take stock of the situation and tabulate all data paving way for fresh Rs. 1000 notes.