It is said based on the number of notes in circulation that replacing the Rs 500 and Rs 1000 notes would cost the government at least Rs 12,000 crore. Currently, there is 1,567 crore-Rs 500 note in circulation in addition to 632 crore-Rs 1000 notes.
The RBI in 2012 incurred a cost of Rs 2.50 and Rs 3.17 to print a Rs 500 and Rs 1000 note respectively. So it would be Rs 3917 crore to print the Rs.500 notes and Rs. 2000 crore for the Rs 1000 notes. So that is Rs 5917 just to print these notes. Since they are being replaced, it's a sunk cost of Rs 5917.
At the same cost, it would be another Rs 3917 crore just to print new Rs 500 notes. The Rs 2000 notes would cost around Rs 2000 crores like the INR 1000 notes.
So removing the old notes and then replacing them is in itself costing the government a mammoth Rs 12,000 crore. This does not take into account the additional safety features on the new notes as well as the cost of logistics for transferring the notes. So the overall cost is only going to increase.