Ten years since Prime Minister Modi's demonetisation

Ten years have passed since the demonetisation carried out by Prime Minister Narendra Modi in 2016. On November 8, 2016, at 8 pm, the Prime Minister addressed the nation on national television, announcing the cancellation of ₹500 and ₹1,000 currency notes. He stated that this stringent step was necessary to rid the country of the termites of corruption and black money. According to this announcement, from midnight of that same day, ₹500 and ₹1,000 notes would cease to be legal tender, and only ₹1, ₹5, ₹10, ₹20, ₹50, and ₹100 notes would remain in circulation.

According to a report by BBC Gujarati, the Prime Minister spoke in his speech about the grave problem of black money and the steps taken by the government to counter it. He clarified that the ₹500 and ₹1,000 notes held by anti-national and anti-social elements involved in the business of corruption, black money, and counterfeit currency would now become mere pieces of paper.

Due to this sudden decision, everyone from the general public to small and large industries faced severe hardships. A single announcement withdrew 86 per cent of the currency from the country's economy. Despite having money, people were unable to spend it, and there were difficulties in withdrawing funds from bank accounts. Long queues formed to deposit old notes and withdraw money from ATMs. The limit for withdrawing money from ATMs was kept at only ₹2,000. The report mentions that there were instances of deaths due to people standing in queues for hours to withdraw notes.

Following demonetisation, the Reserve Bank introduced new ₹500 notes and the ₹2,000 note. However, people faced significant trouble in exchanging ₹2,000 notes, and there was a severe shortage of ₹100 notes. People who did not use digital payments and industries dependent on cash faced major problems. Cash required for hospital treatment, travel, and labour work could not be made available on time.

Politically, the Bharatiya Janata Party described this step as a 'surgical strike' on corruption, while opposition parties termed it a major blow to the economy. Even ten years after this event, opposition parties continue to question the government. Congress leader Jairam Ramesh shared a post by the Economics and Business Editor of 'The Hindu' on social media, in which the decision of November 8, 2016, was called 'Tughlaqi' and attention was drawn to its statistical analysis.

Regarding the success of demonetisation, economic analyst Vivek Kaul stated in an article written for the BBC that the attempt to bring out hidden wealth had failed. Based on the Reserve Bank's annual report, he stated that by June 30, 2017, nearly 99 per cent of the demonetised cash had been deposited back into banks. This meant that the money the government considered black money was not caught, as people possessing unaccounted funds deposited the money using others' bank accounts.

According to the Reserve Bank's report, between April 2016 and March 2017, more than 24 billion ₹500 and ₹1,000 notes were withdrawn from circulation, of which only 5.37 lakh counterfeit notes were caught. The figures show that the proportion of counterfeit notes caught was nearly zero per cent. Notably, in the previous year, without any demonetisation, more than 4.04 lakh counterfeit notes had been caught. Based on all these facts, Vivek Kaul stated that the main objectives of demonetisation were not achieved.