Demonetisation maths
We did the math: Replacing all the old currency will likely take several months
By Harry Stevens and Suchetana Ray
November 17, 2016

It’s been over a week since demonetisation, but the queues and the chaos continue. Prime Minister Narendra Modi, whose decision to scrap ₹500 and ₹1,000 rupee notes has been intensely criticised, has asked for patience.

“I have asked the country for just 50 days,” Modi said during a speech in Goa on Sunday. “Brothers and sisters, give me 50 days.”

New notes are being printed, officials say, and those notes are being distributed to banks and ATMs as fast as possible. But will that happen in 50 days? The answer is, probably not.

Printing new notes could take about six months

Here’s the math. The new rupee notes are being printed at four mints. Together, they can print about three billion notes per month.

The mints have to replace about ₹14 trillion taken out of circulation — roughly equal to the gross domestic product of Portugal. If half that value is printed in ₹500 rupee notes and the other half is printed in ₹2,000 rupee notes, the mints will have to print around 17.5 billion total notes to replace the value of the notes taken out of circulation.

Since you began reading this, Indian mints could have printed about

If half of the value is printed in ₹500 rupee notes and the other half is printed in ₹2,000 rupee notes, that’s a total of

With that money, you could buy about

To replace all of the money taken out of circulation, the mints will have to print about 17.5 billion notes, which would take about

To replace ₹10 trillion, an amount the government says it expects to be returned by the people, the mints will have to print 12.5 billion pieces of banknotes, which would take about 125 days.

Printing 17.5 billion notes at a rate of three billion notes per month will take almost six months. Even if the mints began printing the replacement notes three months ago, they would still need around three more months to complete the printing. Either way, it would be longer than the 50 days Modi asked for.

But printing the notes is only half the battle. Once the notes are printed, they need to be distributed to banks and ATMs so they can find their way into your wallet.

From press to ATM: The journey of a ₹2,000 rupee note

Step 1: Printing presses

One of the two printing presses responsible for churning out new ₹2,000 notes is located here, in Mysuru, Karnataka. The other is in Salboni, West Bengal.

Two more presses — one in Dewas, Madhya Pradesh, and one in Nashik, Maharashtra — are printing ₹500 rupees notes to replace the old ones.

Step 2: RBI issue offices

Once printed, the notes are transported to the 19 Reserve Bank of India issue offices in major cities across the country, such as this one, in Chennai, Tamil Nadu.

Step 3: Currency chests

From the issue offices, the money is transported in high-security vans to more than four thousand currency chests across the country. Currency chests are operated by various banks.

The State Bank of India, the country’s largest bank, operates a currency chest here, in Cuddalore, 175 kilometres down the coast from Chennai. The journey will take about four hours by road.

Step 4: Bank branches

Once a bank has the money in its currency chest, it can restock its bank branches in the surrounding area.

The bank branch in the small town of Nellikuppam, some 13 kilometres west of SBI’s currency chest in Cuddalore, could receive new notes from the Cuddalore currency chest.

Step 5: ATMs

From the bank branches, money is taken to nearby ATMs. The SBI branch in Nellikuppam has an ATM right nearby.

Most of the country’s ATMs are not built to accommodate the new ₹2,000 notes. Thousands of engineers are working as fast as possible to retrofit the country’s 2.18 lakh ATMs. This enormous undertaking is expected to take a few more weeks.

Given the several time-consuming processes required to recirculate the new money, it may be difficult for the country to meet the prime minister’s fifty-day deadline.

Cover design by Anand Katakam; additional web production by Gurman Bhatia; additional reporting by Beena Parmar and Jyotindra Dubey

Clarification: This article has been updated to reflect the fact that some of the mints began printing notes before demonetisation was announced.