The demonetisation of high-denomination currency notes on November 8, 2016, created a nightmare for citizens that lasted several months. Lo...
The demonetisation of high-denomination currency notes on November 8, 2016, created a nightmare for citizens that lasted several months. Long queues formed outside the banks and ATMs to obtain swap denotified currency notes for new ones so that life could continue. This situation persisted even beyond December 30, 2016, the last day for depositing old notes. Economic activity was severely dented for months. What the ruling party thought was a masterstroke turned out to be a disaster.
The sudden demonetisation was premised on the idea that “black means cash”. And, it is in high-denomination currency notes that black money would be held. So if the high-denomination notes were to be suddenly declared as illegal tender, then the black money of the rich would become null and void.
Just before demonetisation was announced, there was Rs 18 lakh crore of currency in circulation. Large denomination currency notes of Rs 1,000 and Rs 500 constituted 85% of that amount. With demonetisation, the denotified notes could not be used except for a few purposes such as to buy fuel at petrol pumps, groceries at Kendriya Bhandars and medicines. They could not be used even for trade and manufacturing.
Surprise announcement
The decision was announced at 8 pm and came into...
