The answer is simple.

Rs 2000 currency note by RBI

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.

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