Rs 500, Rs 2000 Notes Show Three-Fold Rise in Circulation in 5 Years Since Demonetisation

A finance ministry reply in Lok Sabha also revealed that gold smuggling has risen sharply after a pandemic lull.

New Delhi: The Ministry of Finance has in response to a question in Lok Sabha submitted that as per the Reserve Bank of India the circulation of Rs 500 and Rs 2,000 currency notes increased from Rs 9.512 lakh crore as on the end of March 2017 to Rs 27.057 lakh crore by end of March 2022.

The ministry also stated that no instructions have been given to banks on not filling Automated Teller Machines or ATMs with Rs 2,000 currency notes.

Bharat Rashtra Samithi MP Santosh Kumar had asked, “Whether about 9.21 lakh crores worth currency notes of Rs. 500 and Rs. 2000 denominations issued after demonetization, have gone out of circulation as per some data” and “whether the said currency notes have again allegedly turned into black money”.

He had also raised a query on whether the RBI has put restrictions on banks to disburse currency notes of Rs 2,000 denomination through ATMs.

‘No indent for supply…’

In her written reply, Union finance minister Nirmala Sitharaman stated:

“As per Annual Reports of the Reserve Bank of India (RBI), the total value of ₹500 and ₹2000 denomination banknotes in circulation as on end-March 2017 and as on end-March 2022 was ₹9.512 lakh crore and ₹27.057 lakh crore.”

She further said that “no instructions have been given to banks for not filling ₹2000 notes in Automated Teller Machines (ATMs)” and added that “banks make their own assessment of amount and denominational requirement for ATMs on the basis of past usage, consumer requirement, seasonal trend, etc.”

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The minister further said that “as per RBI Annual Reports, the indent for supply of ₹2000 denomination banknotes has not been placed from 2019-20 onwards.”

Photo: Bullion Vault/Flickr (CC BY-ND 2.0)


In response to another question from Trinamool Congress MP Sougata Ray, who had asked, “Whether the Government has taken note of the fact that a large quantity of gold and silver are being smuggled through various sources to the country”; sought “details of airports and other sources where such smugglings were identified”, and if “gold and silver smugglers/carriers are reportedly getting assistance from the cabin crew/airport staff”, Sitharaman offered a statement which showed that the cases of gold smuggling had again reached pre-pandemic levels.

The statement said that while smuggling of gold has increased, that of silver has dropped sharply.

Sitharaman’s reply said, “The smugglers of gold and silver adopt various methods to smuggle gold and silver, including body concealment. In order to deter smuggling of gold and silver, the Customs field formations and Directorate of Revenue Intelligence (DRI) keep a constant vigil and take operational measures such as passenger profiling with the aid of Advance Passenger Information System (APIS), risk-based interdiction and targeting of cargo consignments, non-intrusive inspection, rummaging of aircraft and coordination with other agencies. On detection of cases of attempted smuggling, action is taken in accordance with law, including seizure and confiscation of smuggled gold/ silver.”

The minister further said, “The involvement of cabin crew/ airport staff has been noticed in some cases of attempted smuggling of gold” and that “action is taken against such persons in accordance with law.”

The data provided by the finance ministry revealed that when it came to “the sources where gold smuggling was identified”, there has been a marked increase in both the number of cases and the quantity of gold that has been seized.

Over 2500 kg gold seized

The number of cases of gold smuggling – after experiencing a dip during the COVID-19 period – rose sharply. The total number of cases were 4,784 in 2019-20. They then dipped to 2,032 in 2020-21 before inching up to 2,236 in 2021-22. In 2022-23 (up to February 2023), the number has already reached 4,151.

The data indicated that most gold smuggling is detected at the airports. The quantity of gold seized from airports was 2629.55 kg in 2019-20. It dropped to 1000.50 kg in 2020-21 and then rose to 1239.87 kg in 2021-22 before almost crossing the pre-pandemic levels in the first 11 months of the current fiscal in which the seizure stood at 2531.97 kg.

While no gold smuggling has been detected in the three seaports of Chennai, Cochin and Nhava Sheva, that from other places has reached an all time high of 1459.72 kg in the current fiscal. In the previous three financial years, the seizure from these places had never crossed the one ton mark.

29 cabin crew, airport staff held 

The finance ministry reply also showed that the number of cases in which the cabin crew or airport staff was involved in gold smuggling has risen. While there were 15 such cases in which 22 people were arrested in 2019-20, the number of cases and arrests fell to 14 and 14 respectively in 2020-21, before increasing to 14 and 19 respectively in 2021-22 and rising sharply to 29 and 29 in the first 11 months of the current fiscal.

The minister’s reply also revealed that when it came to silver the metal had not found an equal amount of favour among the smugglers – probably because it is comparatively much cheaper than gold.

The quantity of silver seized stood at nearly 447 kg this year as against 1276 kg in 2019-20, 714 kg in 2020-21 and a whopping 5194 kg in 2021-22.