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India needs a Rs200 note, not a Rs2,000 note and the science behind it
What should be the size of the Apple Mac screen? Technically, Apple can produce hundreds of different sizes, but they have settled on four: 13.3 inch, 15.4 inch, 21.5 inch, and 27 inch. The four are spaced close enough, and far enough to satisfy most Apple consumers.

Industrial design has a mathematical concept called preferred numbers. Way back in 1870s, a French engineer Charles Renard proposed a system based on logarithmic scale to produce a limited number of sizes to cover a wide range. A variant of that internationally accepted system is the 1-2-5 series, which is widely used in minting coins and printing notes.

The 1, 2, 5, 10, 20, 50, 100, 200, 500, 1000… is that series. The beauty of the series is that any adjacent numbers differs by a product of 2 or 2.5. As a result, they are spaced close enough but cover a wide ground. How? Let us look at an Indian street vendor who still measures the fruit he sells on old-fashioned scales. If he has weights of 100gms, 200gms, 500gms and 1 kg, he can give you fruits in multiples of 100gms by using a maximum of three weights. E.g. 800 (500+200+100), 900 (500+200+200). In no case does the seller need to use four weights. If you must follow the decimal system, this is an extremely efficient system.

Now look at the Indian banknotes. Until 8 November 2016, India had currency (notes or coins) with a denomination of 1, 2, 5, 10, 20, 50, 100, 500 and 1000 rupees. Below Rs100, transactions were efficient. The gap between Rs100 and Rs500 (1:5) has been too large. Over the last few years, it has produced inconvenience (certainly) and contributed to inflation (probably). It is well known that bigger values and larger gaps can increase prices. In January 2002, when most European currencies converted to Euro, prices rose on many goods as a result of rounding up. This rounding up phenomenon has made coins below one rupee disappear from India.

I had hoped that Reserve Bank of India (RBI) would use the demonetization to introduce a Rs200 note. That would have bridged the gap between Rs100 and Rs500 and made the cash economy efficient. What we got instead was a Rs2,000 note.

With the death of the Rs1,000 note, the new ratio of Rs500-Rs2,000 (1:4) to follow the already inefficient Rs100- Rs500 (1:5) is not sustainable, now or in future. And since the new Rs500 note is as yet rarely available, the ratio currently is Rs100-Rs2000 (1:20). When the maximum prescribed ratio for efficiency is 1:2.5, in practice we have 1:20, which is catastrophic. That is why; we have millions of people with wads of Rs2,000 notes unable or unwilling to make a small purchase of Rs200.

This is pure and simple mathematical illiteracy. I expect the Reserve Bank to be aware of the Renard series, which is an ISO standard. Politics and economics can be subject to opinions, but not mathematics. You invite disaster when you do not follow the basic number rules.

What India needs to do urgently is to introduce an Rs200 note. And if Rs1,000 is to be permanently abandoned, then to withdraw Rs2,000 as well. For efficient transactions, the ratio in the 1-2-5 series must never exceed 2.5.

(Ravi Abhyankar is an independent analyst and strategic advisor.)

7 months ago

### Gaurav Aggarwal

In Reply to Anoop Sharma 7 months ago

### Gaurav Aggarwal

In Reply to Anoop Sharma 7 months ago

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7 months ago

### Pankaj Jangid

In Reply to Dilip SK 7 months ago

### Probably, this is true. And probably ₹2000 note will go away in very short time.

In Reply to Dilip SK 7 months ago

7 months ago

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### The damage has already happened and now it is time to think of alternate solutions to reduce the difficulties faced by common man. As suggested it would have been better to introduce Rs.200/- or Rs.250/- denomination currency notes instead of high value note of Rs.2000/- which has created the confusion and matters becoming worse for the common man. Yet another suggestion is to introduce Coins for all denomination currencies of Rs.20/- and below. Though the step for demonotisation was welcomed, I think Mody was ill-informed of the possible consequences by the bureaucrats in Finance ministry and RBI. Or even they do not want to be on the wrong side of Mody's books. Urjit Patel took over only a few weeks back and may crave for a post in the next ministry. What happened to the learned economists in Finance ministry and and DBOD ?. Now the worst is yet to come unless immediate proactive steps are not being initiated . To err is human but not with the lives of innocent millions in the country.

Indian National Congress's official Twitter account was hacked on Thursday morning, a day after the account of its Vice President Rahul Gandhi was hacked.

Expletives and abusive tweets were posted on the handle.

One of the tweets posted on the account said that a "full dump" of Congress emails will be posted.

"...Stay tuned for Christmas special. We have enough info to drop your party down to shreds," it said.

"For every retard out there who thinks we have a political agenda - No, we don't," one of the tweets read.

"Corrupt political party trying to (expletives) around with innocent hackers, you think you're cool bro?"

"Remember, we are legion, do not (expletives) with us!" it added.

On Wednesday, Rahul Gandhi's official Twitter account was hacked and expletives and abuses posted on the handle. The abusive tweets were later deleted.

The hackers also removed Rahul's profile picture and changed the account title from @OfficeOfRG to Retarded gandhi.

The Congress said it smacked of "sinister conspiracy and reflected disturbing insecurities of prevalent fascist culture".

Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

7 months ago

### Simple Indian

7 months ago

Cabinet clears Mumbai Urban Transport Project Phase-III
The Union Cabinet on Wednesday approved the Mumbai Urban Transport Project Phase-III (MUTP III) that is aimed at boosting rail infrastructure in Thane, Palghar, Raigad and Mumbai districts of Maharashtra.

The MUTP-III involves expansion of the suburban rail network up to Dahanu by constructing third and fourth lines between Virar and Dahanu (63km), Airoli-Kalwa connector (4km) and doubling of Panvel-Karjat line (28km).

The Western Railway operates suburban services between Virar and Dahanu on the busy mainline Mumbai-Ahmedabad/Delhi route, which is over-saturated.

"Main line is already over-saturated and there is no scope for supplementing suburban services on this line. Construction of additional Virar-Dahanu Road double line will address the demand of commuters in this region. This will provide extension of suburban services from Churchgate to Dahanu Road," said an official release.

The release further said: "Panvel-Karjat line will provide alternate route from Karjat to CSTM via Panvel, which will be shorter by 23 km than the existing route via Kalyan and will reduce travel time between CSTM to Karjat by 35 to 40 minutes by slow trains."

At present, passengers commuting from Kalyan to Vashi or Panvel have to get down at Thane station and take Trans Harbour Link, which results in congestion at the Thane station, which is already a busy station on the Central Railway.

"Airoli-Kalwa corridor will reduce congestion at Thane station and will also save time as these passengers can travel bypassing Thane," said the release.

It further said that the procurement of new coaches will enhance the quality of service and the works proposed under trespass control at 22 locations will reduce trespass significantly.

"The estimated cost of project is Rs 8,679 crore with completion cost of Rs 10,947 crore. The project is expected to be completed in the next 5 years during 13th Plan period," it added.

Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

7 months ago

# NSE: The Real Clean-up that We Need

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