2016 Indian banknote demonetisation

2016 Indian banknote demonetisation
Queues outside a bank to exchange demonetised banknotes in Kolkata on 10 November 2016
Date8 November 2016 (8 years ago) (2016-11-08)
Time20:15 IST (14:45 UTC)
Deaths82[1]
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On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes.[2] Prime Minister Narendra Modi said that this decision would curtail the shadow economy, increase cashless transactions and reduce the use of illicit and counterfeit cash to fund illegal activity and terrorism.[3][4][5]

The announcement of demonetisation was followed by prolonged cash shortages in the weeks that followed, which created significant disruption throughout the economy.[6][7][8] People seeking to exchange their banknotes had to stand in lengthy queues, and several deaths were linked to the rush to exchange cash.[9][10]

According to a 2018 report from the Reserve Bank of India ₹15.3 lakh crore (15.3 trillion rupees on the short scale) of the ₹15.41 lakh crore in demonetised bank notes, or approximately 99.3%, were deposited in banks, leading analysts to state that the effort had failed to remove black money from the economy.[11][12] The BSE SENSEX and NIFTY 50 stock indices fell over 6% on the day after the announcement.[13] The move reduced the country's industrial production and its GDP growth rate.[14] It is estimated that 1.5 million jobs were lost.[15] The move also saw a significant increase in digital and cashless transactions throughout the country.[16]

Initially, the move received support from some central bankers as well as from some international commentators. The move was also criticised as poorly planned and unfair, and was met with protests, litigation, and strikes against the government in several places across India. Debates also took place concerning the move in both houses of Parliament.[17][18][19]

The consensus is that demonetisation was not the right move to target black money, and was unsuccessful.[20][21] Moreover, it was based on an incorrect understanding of what constitutes black money.[22]

  1. ^ Cite error: The named reference CatchNews was invoked but never defined (see the help page).
  2. ^ "Withdrawal of Legal Tender Status for ₹ 500 and ₹ 1000 Notes: RBI Notice (Revised)". Reserve Bank of India. 9 November 2016. Retrieved 9 November 2016.
  3. ^ "Modi urges country to become a cashless society". The Hindu. 27 November 2016.
  4. ^ "Here is what PM Modi said about the new Rs 500, Rs 2000 notes and black money". India Today. 8 November 2016. Retrieved 9 November 2016.
  5. ^ "Notes out of circulation". The Times of India. 8 November 2016.
  6. ^ Saikia, Bijoy Sankar (18 November 2016). "Demonetisation may drag India behind China in GDP growth, rob fastest-growing economy tag". The Economic Times. Retrieved 5 January 2017.
  7. ^ "The dire consequences of India's demonetisation initiative". The Economist. 3 December 2016. Retrieved 5 January 2017.
  8. ^ "Demonetization Announcement Anniversary 2017 | Onmanorama". OnManorama. Retrieved 7 November 2017.
  9. ^ Cite error: The named reference Aljazeera-1 was invoked but never defined (see the help page).
  10. ^ "Demonetisation Death Toll Rises To 25 And It's Only Been 6 Days". huffingtonpost. Archived from the original on 16 November 2016. Retrieved 15 November 2016.
  11. ^ Cite error: The named reference FTdemonetisationFail was invoked but never defined (see the help page).
  12. ^ Cite error: The named reference BBCdemonetisationFail was invoked but never defined (see the help page).
  13. ^ Cite error: The named reference stockcrash9nov was invoked but never defined (see the help page).
  14. ^ "Thanks to Demonetisation and GST, India's GDP growth hit a 4-year low at 6.5 per cent". India Today. 6 January 2018. Retrieved 2 October 2018.
  15. ^ "Demonetisation drive that cost India 1.5m jobs fails to uncover 'black money'". the Guardian. 30 August 2018. Retrieved 31 July 2021.
  16. ^ "Moving from Cash to Cashless Economy: Toward Digital India". Korea Distribution Science Association.
  17. ^ "Demonetisation debate in Parliament: Disaster, says Chidambaram; high cash economy corrupt, counters Jaitley : India, News – India Today". Indiatoday.intoday.in. 9 February 2017. Retrieved 26 June 2017.
  18. ^ "Demonetisation: Opposition calls for countrywide protest on November 28". The Indian Express. 23 November 2016. Retrieved 23 November 2016.
  19. ^ "'Demonetisation protest sure to succeed with people's support'". The Economic Times. 24 November 2016. Retrieved 24 November 2016.
  20. ^ Cite error: The named reference decoded was invoked but never defined (see the help page).
  21. ^ Kumar, Arun (20 December 2017). Demonetization and Black Economy. Penguin Random House India Private Limited. ISBN 978-93-87326-41-5. Retrieved 24 October 2023.
  22. ^ Ramakumar, R. (16 February 2018). Note-Bandi: Demonetisation and India's Elusive Chase for Black Money. Oxford University Press. ISBN 978-0-19-909272-7. Retrieved 24 October 2023.