Most of the country did not take the demonetisation exercise of 2016 well. Following the move, there was a buzz in the media about different features of the new Rs 2,000 note. And the latest move by the Reserve Bank of India (RBI) to withdraw its highest denomination 2000-rupee note from circulation, has sparked a fresh controversy.
Is Rs 2,000 note the highest-value currency ever printed by India's central bank? Nope. You'd be surprised to know that India had Rs 5,000 and Rs 10,000 notes earlier. Yes, Rs 10,000 was the highest-value currency ever printed by the RBI.
Rs 10,000 note. Image taken from RBI Museum
The RBI first printed Rs 10,000 note in 1938. It was demonetized in January 1946, but was again reintroduced in 1954. It was finally again demonetized in 1978.
When Raghuram Rajan Floated The Idea Of Rs 10,000 Note
The RBI, under former governor Raghuram Rajan, had suggested the re-introduction of Rs 5,000 and Rs 10,000 notes. The central bank had made the recommendation in October 2014, as per the information provided by the RBI to the Public Accounts Committee, TOI had reported in 2017.
The reason cited behind this idea was that the value of the Rs 1,000 note was being eroded by inflation.
In May 2016, the government under Prime Minister Narendra Modi informed the RBI about its "in principle" decision to introduce a new series of Rs 2,000 notes, and the printing presses were finally given instructions in June 2016.
Late Arun Jaitley, the then finance minister of India, had later said that the government did not accept the recommendation for Rs 5,000 and Rs 10,000 notes as it wanted replacement currency available immediately, and so went for Rs 2,000 notes.
In a later stage, Raghuram Rajan told that it was difficult to have currency notes of bigger denominations due to fear of counterfeiting.
"Given that we are in a somewhat difficult neighbourhood, there is some concern on the extent of forgery that will take place if we do too large value notes," Rajan said in September 2015, probably after the government had rejected the RBI's idea.
Countries usually print high-denomination notes due to ultra-high inflation when the value of the currency depreciates so much that even small purchases require a large number of currency notes.
During Rajan's tenure as RBI Governor, India saw retail inflation cross the 10 per cent mark. When Raghuram Rajan took office as the RBI Governor, during the Manmohan Singh government, India's retail inflation hovered at 10.70 per cent mark. But it had nearly halved by the time he left the RBI in 2016 during the Narendra Modi government.