Ban ₹500 Notes? Is This Good Idea Babu garu?

Article by Kumar Published on: 2:02 pm, 9 November 2026

Andhra Pradesh chief minister Chandrababu Naidu had always been first in line when it comes to bringing public policy reforms. He had been consistently advocating against the circulation of black money and was first to raise his voice against big denomination notes that were eventually demonetised.

Now the chief minister has raised his voice again, and this time it is regarding the suspension of ₹500 notes in India.

Naidu addressed the media today and appealed to Prime Minister Narendra Modi to withdraw ₹500 notes from circulation. He recalled that he had made a similar appeal during the demonetisation period and reiterated his demand once again.

Even though CBN’s suggestion to withdraw ₹500 notes from circulation may sound like another step towards a digital economy. But at a time when ordinary Indians are struggling with rising living costs, such a move could create more problems than it solves.

For the common man, ₹500 is no longer a big amount. Vegetable prices, groceries, fuel, medicines, school fees and other daily expenses have become increasingly expensive. A ₹500 note that once carried considerable purchasing power now barely covers a family’s basic shopping needs. With the rupee also facing pressure against the US dollar, people are already feeling the impact of rising costs.

In this situation, the idea of withdrawing ₹500 notes could be seen as an unnecessary burden on ordinary people. Small traders, daily wage workers, farmers and people who still depend heavily on cash could face difficulties. Digital payments have grown rapidly, but cash continues to play an important role in everyday transactions, particularly in rural areas.

There is also a lesson from the 2016 demonetisation exercise. According to the RBI’s 2017-18 annual report, 99.3% of the banned currency returned to the banking system. This raised questions about whether demonetisation actually removed black money from the economy. However, it did give a big push to digital payments, which became much more popular after the exercise.

Chandrababu’s argument is that big denomination notes make it easier to move black money, while digital transactions leave a clear record. But simply removing ₹500 notes cannot completely stop corruption or illegal money transactions. These problems need stronger monitoring and better enforcement.

The timing of such a decision is also important. The Modi government may not want to take another big risk with currency when people are already facing rising prices. The 2016 demonetisation experience, including cash shortages and long queues, is still fresh in public memory.

Modi may therefore think twice before accepting this proposal. Digital payments can be encouraged further without making cash transactions difficult for ordinary people.

After all, demonetisation may have changed how Indians make payments, but it did not eliminate corruption. Repeating a similar exercise without addressing the root problem could create more trouble than benefits, a neutral analyst commented..