The Telugu Desam Party president made the appeal on Monday, a day after the tenth anniversary of the Union government’s 2016 demonetisation decision. He urged greater reliance on digital payments and proposed retaining Rs 100 and Rs 200 notes for cash transactions.
Naidu said he had raised the proposal with Prime Minister Narendra Modi before and intended to continue pressing for changes to the currency system. His remarks amounted to a policy recommendation, not an announcement of any decision by the Union government or the Reserve Bank of India (RBI).
“I had urged the Prime Minister to consider this earlier and I am demanding it again now. I will keep raising this issue,” Naidu said. He also advocated removing denominations of Rs 1,000 and Rs 2,000, although the former is no longer issued and the latter has already been withdrawn from circulation.
The chief minister linked his proposal to concerns about the use of cash to influence voters. He argued that restricting access to large notes could make the distribution of money during elections more difficult and reduce incentives for candidates to recover campaign expenditure after entering office.
Naidu said the National Democratic Alliance (NDA) had attempted to establish a different political culture by discouraging cash distribution during elections. He claimed the alliance had achieved considerable success in limiting the practice, although he did not provide independently verifiable figures establishing its extent.
“Politics should not be about money; it should be done with a spirit of service,” he said, describing electoral expenditure as a factor that could encourage corruption among successful candidates.
His argument rests on the premise that smaller denominations increase the difficulty of storing and transferring large amounts of physical cash. However, withdrawing a denomination would not, by itself, prevent unaccounted transactions or establish that corruption had declined. The effectiveness of such a measure would depend on implementation, enforcement and the availability of alternative payment methods.
There has been no announced RBI programme to withdraw the current Rs 500 banknote. It remains legal tender and is widely used for ordinary transactions. Naidu’s remarks therefore do not change the status of notes held by households, traders or businesses.
The distinction is important because the 2016 exercise invalidated the then-existing Rs 500 and Rs 1,000 notes, while the RBI’s later withdrawal of Rs 2,000 notes did not remove their legal tender status. The central bank announced the latter withdrawal in May 2023 as part of its clean note policy.
Under the RBI’s published arrangements, Rs 2,000 notes can still be exchanged at its designated issue offices, and holders can use specified procedures to have their value credited to bank accounts. The central bank said in May 2026 that 98.47 per cent of the value outstanding when the withdrawal was announced had been returned by the end of April.
Naidu’s renewed intervention places the focus on Rs 500 notes, which remain the highest denomination in routine circulation. His suggestion to retain only Rs 100 and Rs 200 notes would represent a substantial change in the denominations available for everyday cash payments.
The chief minister also promoted technology-driven administration, saying better systems could help address corruption while supporting wealth creation and poverty reduction. He said weaknesses in existing processes had allowed corrupt practices to become entrenched and that he had sought changes over many years.
He connected those concerns with election financing, contending that candidates who spend heavily to secure office may subsequently feel pressure to recoup their expenses. Reducing campaign spending, he argued, could shift political incentives towards public service rather than personal financial recovery.
The proposal also raises practical questions for cash-dependent consumers and small businesses, particularly where electronic payments are unreliable. Naidu did not set out a timetable, an exchange mechanism or an estimate of the costs associated with replacing the denomination.
Naidu leads the Telugu Desam Party, a constituent of the NDA at the national level. His comments were made as a political appeal for currency reform, rather than as a measure initiated by the Andhra Pradesh administration, which does not determine the denominations of banknotes issued by the RBI.
