Small Traders not Accepting Rupees 2000 Notes amid False Demonetization Rumour

Small traders are not accepting Rupees 2000 notes amid false demonetization rumors. Rumours started after Nirmala Sitharaman commented on people hoarding unaccounted cash in Rupees 2000 denomination.

The Rumour

The message circulated on whatsapp and other websites stated that RBI discontinued the use of Rupees 2000 notes. Further, new Rs 1000 notes will come in circulation from 1st January 2020. It also informed people that they are only allowed to exchange up to Rs 50,000 in Rs 2000 denomination. The rumor spread in haste and small traders, fearing second demonetization, refused to accept Rupees 2000 notes from the customers. A logistics company situated in Bangalore directed its employees not to accept Rupees 2000 notes from the customers.

Anurag Thakur, Minister of State for Finance, clarified in Rajya Sabha that government haven’t taken any demonetization decision. The less number of notes in circulation is just due to hoarding.

How did the Rumours Start?

Though the numbers of Rupees 2000 denominations have decreased in unaccounted cash seizures, the note remains hoarders first choice. The Income Tax Department released a report that included the details of unaccounted cash seizures over the last three years. The report revealed that the percentage of Rupees 2000 notes in cash seizures continuously declined in three years from 68% (2017-18) to 66 %( 2018-19) to 43% in this fiscal year. Besides, RBI, in a reply to RTI to National Investigation Agency said that it will limit the printing of Rs 2000 notes due to decline in circulation. Rs 2000 notes accounted for 50% of the notes in circulation in March 2017 as compared to 31% in March 2018.

In all, RBI has not released any notification regarding phasing out the Rs 2000 note. Discontinuation of Rs 2000 notes is highly unlikely. Traders and small business shouldn’t worry about these false rumours.

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