Why did RBI choose to come out with a ₹2000 note instead of a newer ₹1000 note?
There are various reasons for it. One major reason is to cut down the production and logistics costs. With the introduce of Rs 2000 notes more amount can be printed in less cost.
Other reason could be to promote cashless transactions. As there is no note of Rs 1000 as of now, so people who want to do transaction of denominations like say Rs 700 or Rs 1700 will opt for cashless ways than indulging in the pain of getting change.
Let's say we want to make every quantity from Rs. 500 to Rs. 5,000 in increments of Rs. 500
And we have only 2 types of notes - Rs. 500 note and Rs. 1000 note.
Let's see how many minimum notes we need.
Rs. 500 -> 1 note (500)
Rs. 1000 -> 1 notes (1000)
Rs. 1500 -> 2 notes (1000+500)
Rs. 2000 -> 2 notes (1000+1000)
Rs. 2500 -> 3 notes (1000+1000+500)
Rs. 3000 -> 3 notes (1000+1000+1000)
Rs. 3500 -> 4 notes (1000+1000+1000+500)
Rs. 4000 -> 4 notes (1000+1000+1000+1000)
Rs. 4500 -> 5 notes (1000+1000+1000+1000+500)
Rs. 5000 -> 5 notes (1000+1000+1000+1000+1000)
Total -> 1+1+2+2+3+3+4+4+5+5 = 30 notes
Now suppose we have the same task, but we have only Rs. 500 and Rs. 2000 notes -
Rs. 500 -> 1 note (500)
Rs. 1000 -> 2 notes (500+500)
Rs. 1500 -> 3 notes (500+500+500)
Rs. 2000 -> 1 note (2000)
Rs. 2500 -> 2 notes (2000+500)
Rs. 3000 -> 3 notes (2000+500+500)
Rs. 3500 -> 4 notes (2000+500+500+500)
Rs. 4000 -> 2 notes (2000+2000)
Rs. 4500 -> 3 notes (2000+2000+500)
Rs. 5000 -> 4 notes (2000+2000+500+500)
Total - > 1+2+3+1+2+3+4+2+3+4 = 25 notes
We see that already there is a difference of 5 notes. If we were counting all possible values from Rs. 500 to Rs. 10000; then
With Rs. 500 and Rs. 1000 notes, we'd need -> 110 notes
With Rs. 500 and Rs. 2000 notes, we'd need -> 75 notes
We see that the difference is considerable!
This comes as a factor in both the logistics of printing cost of these new currency notes, as well as handling them.All in all, this is a very logical decision by the government.
