Description

On 8 November 2016, the prime ministerannounced the immediate cancellation of allRs 500 and Rs 1000 denomination notes,wiping out 86 per cent of the currency incirculation. India's well-functioning economywent into a tailspin.This move, it was claimed, was made to wipeout corruption, deter the generation of blackmoney, weed out fake Indian currency notesand curb terrorism.Overnight, people in India realized that the cash intheir pockets had no value. A window of fifty dayswas granted to 1.3 billion people to convert theirold notes into new ones. Businesses, especially inthe unorganized sectors, came to a grinding halt.Patients in hospitals faced huge problems, farmershad difficulty buying inputs, weddings were scaleddown, and fishermen watched their catch rot. Manylost their jobs and could not support their families.A year later, the RBI announced that 99 per centof the old currency notes had been deposited withit. India continues to grapple with the effectsof this move. The black economy has not beendented counterfeiting and terrorism continuethe credibility of the RBI, banks and currency isdamaged, accountability of the parliament and theprime minister has been eroded and the social dividehas widened. There have been many arguments andcounter-arguments from both sides, but they havemissed the complete picture.Demonetization and the Black Economy,for the first time, lucidly explains the storyof demonetization along with its effects onthe economy.