Ans:
Printing of banknotes in such a volume and value should be based on various factors such as:
If demand for notes in circulation increases to meet the requirements of the public and the demand can be estimated using statistical models such as Inflation, GDP, Interest rates, etc.
To ensure good condition notes in circulation by replacing the soiled/mutilated notes. Replacement can be done on the basis of the average life of banknotes
So, by considering the above factors, the Reserve Bank of India (RBI) prints banknotes in consultation with the Government of India (GOI) and the printing presses.