Why small notes are more prevalent in big countries?

New Delhi: Exactly five years ago in the country i.e. on November 8, 2016, Prime Minister Narendra Modi took a big decision, under which demonetisation was announced in India and 500 and 1000 notes were out of circulation. In return, new notes of 2000 and 500 rupees were introduced in the market, its purpose was to reduce black money and corruption. At present, notes up to Rs 10, 20, 50, 100, 500 and 2000 are in circulation in India. The 500 and 1000 denomination notes that were withdrawn during demonetisation were equivalent to about Rs 15.5 lakh crore. At that time it was 86% of the total currency in circulation in India. But do you know that in countries like America, China and Germany, not big but small notes are given more priority.

The largest note in America is 100 dollars, similarly the largest note in China is 100 yuan, in Germany the largest note is 500 euros. But now the Central Bank of Europe is also preparing to take this 500 note out of the market, because most of the terrorist attacks in Europe in the last few years, were mostly used in the funding of 500 Euro notes. That’s why sometimes 500 note in Europe is also called Bin Laden note. Actually, the bigger the note is in circulation, the easier it is to do corruption and spread terrorism on its own. For example, if someone has 1 crore rupees in cash and all the notes are 50-50 rupees, then he has to keep two lakh notes, which is not easy to hide, if the cash is in the form of hundred-rupee notes. So the total number of notes will become 1 lakh, but if all the notes are of 2000 rupees, then keeping only 5 thousand notes will work. The bigger the note is, the easier it becomes to keep it hidden as cash.

Let us tell you that at present 19 billion 50 million notes of 50 rupees are in circulation in India, 10 billion 95 million notes of 100 rupees and 2 billion 450 million notes of 2000 rupees are currently in circulation. Due to the large currency notes in the country, people evade taxes, commit financial crimes, they are used in drug smuggling, terrorists are funded and most of all, it makes it easy to hoard black money. While small notes become important for everyday needs, this allows for more transparency in transactions, making small transactions easier. The economy of rural areas is mostly dependent on small notes, it is also not easy to deposit it as black money and if small notes get mutilated or destroyed, the loss is less than the big notes.

One of the major benefits of demonetisation was that now more people are paying taxes in India than before and the conviction rate in cases of tax evasion has increased 6 times. Apart from this, after demonetisation, a good and strong structure of digital transactions has been created in India. This year, in the month of October alone, UPI payments worth more than Rs 7.5 lakh crore have been made. There has been an increase in the number of people doing digital transactions on commerce platforms and these people return less once purchased goods than those who pay cash.

Apart from this, the trend of fake notes in the market has reduced every year since demonetisation. In 2016, 7.5 lakh counterfeit notes were seized, whereas in 2020 only 2 lakh counterfeit notes have been caught. At the same time, till the 29th of last month, 29 lakh crore rupees were in circulation in India in the form of cash. But if there was no demonetisation, then Rs 32.5 lakh crore would have been in circulation in the form of cash in India at this time. Let us tell you that before demonetisation in the year 2016, Rs 17.5 lakh crore was in circulation in India in the form of cash.