A lot has already been said and done about the demonetization of ₹500 and ₹1,000 notes by the government towards end of 2016. The idea itself has its merit. There are two key reasons why high denomination notes need to be discouraged:
- Make it difficult to carry/work with large amounts of cash for smugglers and black money users.₹1 Crore in₹2,000 notes is 50 bundles but in ₹100 notes is 1000 bundles
- Less attractive to fake as the forgers are not going to make much of a return on smaller denominations
We suggest government introduce a new ₹200 note and focus on printing mainly ₹100,₹200 and ₹500 notes and not print many notes of higher denominations.