Most people in bank queues could be proxy for others, said economist Bibek Debroy.
For those who say that the new Rs 2,000 note will fail at making it harder to hoard black or undeclared money, economist Bibek Debroy has a simple answer: "Don't assume the government of India is stupid."
Critics of the week-old ban on 500 and 1,000 rupee notes say that the sudden removal has hit the poor hardest since they transact entirely with cash.
The new Rs 500 notes were only released to banks yesterday, while Rs 2,000 notes are being given to account holders at banks and ATMs. Without enough Rs 500 notes in circulation, old Rs 100 notes running out quickly, people are left only with Rs 2,000 notes to offer at shops. It's impossible to get any change.
But Mr Debroy, a member of the Niti Aayog or the PM's Policy Commission, said that the 2000-rupee note is required in circulation because 100 rupee notes wouldn't take care of everyone's needs.
"You have to have 2000 rupees notes in the ATM because otherwise only 100 rupees will run out very soon. And, yes, the 2000 rupee notes could have been sent in earlier to banks but you would have compromised the secrecy.''
He says that the checking measures for future amassment of black money will be announced later in other measures.
Prime Minister Narendra Modi's radical move at demonetization has been largely praised by financial experts. The government has said that the fact that the ban on the old notes was announced just four hours before they were declared invalid was essential to prevent those with black money from channeling their untaxed cash into buying assets like property or gold.
"Only 7-8 people in the government knew about this move," said Mr Debroy to NDTV. When asked if he was among them, he hinted, "Can you keep a secret? Because I can.''
The problem is that across the country, those outside the banking system have been left stranded without cash. Banks continue to witness round-the-block lines of people desperate to collect the allotted quota of new notes.
Right next to his office are the teeming crowds outside the Reserve Bank of India; Mr Debroy has been carefully studying the crowds there and he believes that a majority of them are not trying to swap their old notes for new ones, but serving as proxies for others. That is partly why the government today said that indelible ink, the sort used for voting, will be marked on those who've collected their cash.
"Today's measure of indelible ink will take care of letting other people exchange cash,'' he said. In the first six days, over 45 billion dollars have been deposited in banks as people turn in their old notes. "There is a short-term disruption in production but the gains are long term and helps cash lying around people's houses back into the system," said Mr Debroy.
For those who say the timing could have been better - farmers will soon harvest their crops and they transact entirely in cash, Mr Debroy said there's no perfect window. "It's always sowing season or some other season; maybe, it would have been better in the height of summer, but can you imagine people standing in queues then?''