On 19th May 2023, the Reserve Bank of India announced that it is withdrawing the circulation of ₹2000 currency notes. However, the central bank said that the currency notes will still continue to be legal tender, and added that the public can exchange the notes till 30 September. RBI also said that printing of the high-value banknotes was stopped almost five years ago.
However, all the opposition parties including Congress engaged in attacking the union government over this decision. The people have been given time till September 30, 2023, to exchange notes or deposit them in the bank. The 4-month deadline for exchanging notes is considered sufficient. However, the opposition is trying to politicize this issue. They are also trying to create panic by comparing it to demonetisation, which was a completely different move. In fact, this move to phase our Rs 2000 notes is not sudden at all and was being planned for the past many years. It was, in fact, only supposed to be a temporary move from the beginning.
It is, therefore, necessary to take an account of similar decisions taken by various Congress governments in the past when currency notes were either discontinued or demonetised.
Be it the Jawaharlal Nehru government which took over immediately after independence or the Manmohan Singh government that led the country for a decade in the twenty-first century, there have been many instances of significant decisions regarding currency notes. Sometimes the decisions were about introducing the currency, while at other times the decisions were about discontinuing the currency. But while accusing the Modi government of miscalculating demonetisation in 2016 and withdrawing Rs 2000 notes in 2023, congress has forgotten the currency decisions it took.
The Reserve Bank of India printed the highest denomination note, which was the Rs 10,000 note, in 1938 along with other higher denominations of Rs 100, 500 and 1000. It was demonetised in January 1946 but later reintroduced in 1954. During the reintroduction in 1954, Jawaharlal Nehru served as the Prime Minister of India.
In the first demonetisation, Rs 500, Rs 1,000 and Rs 10,000 notes were demonetised to control black money. the date was 12th August 1946. Jawaharlal Nehru became the de-facto Prime Minister – that is, the chief of the interim government – on 2nd September 1946. In 1954, his government reintroduced Rs 1000, 5000, and 10000 currency notes which were earlier demonetised to control black money. Essentially, this move by Jawaharlal Nehru was one of the factors which led to the problem of black money in the first place.
On 16th January 1978, the Morarji Desai government had to take a bold decision to demonetise all the denominations above Rs 100 in order to control the menace of black money. This included demonetisation of the currency notes of Rs 500, 1000, 5000, and 10000. After this announcement by the government, it was decided to close all the banks and their branches in the country as well as the treasury of the government on January 17, 1978. Dr Manmohan Singh played an important role in this demonetisation. He served as the finance secretary in the Morarji Desai government.
However, this step taken by the Morarji Desai government was not enough to revive the economy. Meanwhile, India saw two more Congress governments having a full majority in the Lok Sabha. Naturally, the corruption and black money went up, and despite a growing economy, the currency kept losing purchasing power. In October 1987, Rs 500 notes were reintroduced. Later, in 2000, Rs 1000 notes were also reintroduced.
Among other withdrawals of currencies during the Congress governments, Rs 1 and Rs 2 notes were removed from circulation in 1995 while 25 paise and all paise coins below this denomination were withdrawn in 2011.
In early 2014, the Congress-led UPA government was in power at the Centre with Manmohan Singh as the prime minister. Then, on January 22, 2014, the RBI announced the withdrawal of all pre-2005 notes. It also included notes ranging from Rs 10 to Rs 500 and Rs 1000. However, then Congress leaders and their other allies did not try to oppose this decision of the government.
This decision came just before the Lok Sabha elections of 2014 – when Narendra Modi had come up as the challenger to this decade-long corruption-hit government whose evaluation was left to the historians by then Prime Minister Manmohan Singh himself weeks before taking this decision. Congress leaders and their other allies did not try to oppose this decision of the government in 2014. But they did demonstrate a vocal and abusive opposition in 2016 and they are repeating the hues and cries in 2023 against Narendra Modi.
