The Reserve Bank of India’s (RBI) recent decision to withdraw all INR 2,000 notes from circulation has raised eyebrows and prompted calls for greater transparency. The explanations provided thus far have failed to allay concerns, necessitating a more forthcoming approach from the regulator. While the RBI asserts that this move should not be misconstrued as demonetization but rather the withdrawal of notes that have served their purpose, further clarification is needed. In response to a petition challenging the decision, the RBI informed the Delhi High Court that the withdrawal is a statutory exercise and not demonetization. Governor Shaktikanta Das explains that the INR 2,000 notes have completed their intended lifespan and are being withdrawn as part of routine currency management operations, following their introduction to replenish the notes removed during the 2016 demonetization. The clean notes policy seeks to provide clean and untarnished currency to the public by withdrawing certain series and replacing them with new ones. Typically, this process occurs without much fuss. However, the cancellation of the INR 2,000 denomination itself is an uncommon occurrence, raising suspicions among the public.
Concerns have already emerged regarding the time frame for exchanging the currency with lower denomination notes, as it potentially provides an opportunity for individuals with black money to regularize their holdings without scrutiny or declaration. Authorities clarified that the exchange process does not require identification or form-filling, which raises transparency concerns and presents an advantageous situation for black money holders. Given the resourcefulness and ingenuity of individuals in this category, there are numerous ways they can potentially exploit the system if there is any inherent vulnerability within the RBI scheme. The exclusion of transparency measures may not be coincidental and could result from political intervention, leading opposition parties to voice their concerns. This situation parallels the electoral bonds scheme introduced by the Modi government, aimed at promoting transparency in election funding but subsequently criticized for potentially benefiting the ruling party through undisclosed means. The electoral bond regime has inadvertently become a subject of controversy, and its timing is troubling.
Critics argue that electoral bonds possess inherent anti-democratic characteristics, as they enable political parties to receive funding without disclosing the sources. Notably, banks are required to maintain the confidentiality of details provided by bond purchasers, only disclosing them upon demand from a competent court or upon registration of a criminal case by a law enforcement agency. Anonymity for electoral bonds is further protected by the Representation of Peoples Act. Although political parties are obligated to report contributions exceeding twenty thousand rupees received from non-government companies, contributions made through the electoral bond scheme are exempt from such reporting. Election Commission data reveals that between March 2018 and 2022, the BJP received over half of all electoral bonds, amounting to INR 5,270 crore out of a total of INR 9,208 crore or 57 per cent. In contrast, the opposition Congress party received INR 964 crore (10 per cent) during the same period, while West Bengal’s ruling Trinamool Congress received INR 767 crore (8 per cent). Given the circumstances, the RBI must address the concerns surrounding the withdrawal of INR 2,000 notes and provide enhanced clarity on the matter. Increased transparency is essential to foster public trust and mitigate any potential misuse or unintended consequences that may arise.