Black Money and Corruption Have Not Declined a Decade After Demonetisation

An analysis a decade after demonetisation reveals that there has been no impact on black money and corruption. According to a report by Scroll, the goals set by Prime Minister Narendra Modi in 2016 do not appear to have been achieved based on government data and global indices.

On November 8, 2016, at 8 pm, through a surprise address, the Prime Minister rendered 86% of India's currency notes invalid. He announced the demonetisation of two notes, the 500 and 1,000 rupee denominations, effective from midnight. Claiming that this revolutionary step would cause "temporary hardship," Modi asserted that it would curb evils such as black money, corruption, counterfeit currency, and terrorism. He also called upon Indians to make a "great sacrifice" to cleanse the country.

However, a decade later, the situation does not indicate that black money or untaxed cash has decreased within the economy. While there has been a decline in counterfeit notes, there has been no change in the levels of corruption, and law enforcement agencies continue to struggle against terrorist financial transactions. It was noted in the Prime Minister's 2016 speech that India's "currency management" was such that high-value notes accounted for between 80% and 90% of the country's cash value. Modi had stated, "The proportion of cash in circulation is directly linked to the level of corruption."

This situation remains similar in 2026. After the government phased out 2,000 rupee notes, the 500 rupee note has become the highest denomination. According to the Reserve Bank of India's recent annual report, this note holds an 85.5% share of the total cash value in 2025-26. Cash continues to operate mandatorily at similar levels in the formal economy. Following global practices, Indian financial institutions, such as private, government, and cooperative banks, prepare Cash Transaction Reports (CTRs) for cash deposits and withdrawals exceeding ₹10 lakh. Data maintained by the Financial Intelligence Unit (FIU) shows that while there was a slight decrease in CTRs after demonetisation, they have increased since 2023, surpassing pre-demonetisation levels.

The Prime Minister emphasised in 2016 that demonetisation was a necessary step against counterfeit currency, which was frequently used to fund terrorism. He stated, "Enemies across the border run their operations using counterfeit currency. This has been going on for years."

Data shows that the detection of counterfeit notes in Indian banks has decreased, but seizures by law enforcement agencies have increased. According to the RBI, 0.00071% of notes were found to be counterfeit in 2014-15, which decreased to 0.00013% in 2025-26. Similarly, there has been a slow decline in Counterfeit Currency Reports (CCRs) registered with the FIU. Financial institutions filed 3.5 lakh CCRs in 2014-15, which increased to 4.1 lakh in 2015-16, while this figure was 2.1 lakh in 2024-25.

However, according to the National Crime Records Bureau, there has been a disproportionate increase in the seizure of counterfeit Indian currency by the police since 2020. This may also point towards better law enforcement. The year 2022 was an exception in this regard, when counterfeit notes worth ₹382 crore were seized.