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On 8 November 2016, the prime minister
announced the immediate cancellation of all
Rs 500 and Rs 1000 denomination notes,
wiping out 86 per cent of the currency in
circulation. India`s well-functioning economy
went into a tailspin.
This move, it was claimed, was made to wipe
out corruption, deter the generation of black
money, weed out fake Indian currency notes
and curb terrorism.
Overnight, people in India realized that the cash in
their pockets had no value. A window of fifty days
was granted to 1.3 billion people to convert their
old notes into new ones. Businesses, especially in
the unorganized sectors, came to a grinding halt.
Patients in hospitals faced huge problems, farmers
had difficulty buying inputs, weddings were scaled
down, and fishermen watched their catch rot. Many
lost their jobs and could not support their families.
A year later, the RBI announced that 99 per cent
of the old currency notes had been deposited with
it. India continues to grapple with the effects
of this move. The black economy has not been
dented; counterfeiting and terrorism continue;
the credibility of the RBI, banks and currency is
damaged, accountability of the parliament and the
prime minister has been eroded; and the social divide
has widened. There have been many arguments and
counter-arguments from both sides, but they have
missed the complete picture.
Demonetization and the Black Economy,
for the first time, lucidly explains the story
of demonetization along with its effects on
the economy.
ISBN - 9780670090075
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Pages : 240
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