Indian Government decided Not to Discontinue Circulation of Higher Denomination Notes

The Indian government in October 2011 decided not to discontinue circulation of higher denomination notes of Rs 500 and Rs 1000 despite demands from civil society groups that big currency notes made it easier for those with black money to stash their cash and were the primary causes of inflation.

Of the total Rs 9.70 lakh crore worth currency notes in circulation as on 30 June 2011, more than 80% are in the denomination of Rs 500 and Rs 1000. The total value of notes of Rs 2, 5, 10, 50 and 100 in circulation is less than Rs 2 lakh crore.

 The demand to curb higher denomination notes was with an objective to check the menace of unaccounted money, stop fake currency circulation and curb anti-national and terrorists using these counterfeit currency to destabilize the economy.

Civil society groups demanding withdrawal of higher denomination notes pointed out that even US and European countries where the per capita income is much higher than India’s, the denomination used is much smaller in comparison. The largest denomination note in the US is of $100.

Civil society groups’ demand had the support from revenue intelligence agencies which have been grappling with the menace of counterfeiting.

A recent report prepared by the Directorate of Revenue Intelligence (DRI) in association with the Intelligence Bureau, RAW and CBI had pointed out that fake Indian currency notes in circulation in India could be as high as worth Rs 6000 crore and it seriously undermined the credibility of the rupee.