Analysts have suggested that the recent decision to withdraw Rs 2000 notes may have political motivations. Jefferies analyst Chris Wood, in an emailed response to a query, said that he had noticed “rumours that have been gaining some traction in India over the past month that the withdrawal of the Rs 2000 note is linked to a desire to promote the larger denomination (Rs 200) in the run-up to the 2019 general election.”
He added that while this was purely speculation, it was plausible in his view and could be corroborated by the fact that the RBI had been issuing very large numbers of the smaller denomination note since May 2018. He went on to suggest that this could potentially be part of a government strategy to “force a larger proportion of the Indian population into digital transactions or into the banking system more generally”.