November 8, 2021 marks five years of demonetisation in India. On this day in 2016, in a televised address at 8 pm, Prime Minister Narendra Modi declared that currency notes of ₹500 and ₹1000 these two denominations were 86% of the currency in circulation at the time in terms of value would cease to be legal tender. What has changed in the Indian economy in these five years? How many of these changes are linked to demonetisation?
The Congress and Trinamool – criticised the government, calling the move a disaster.Congress leader Priyanka Gandhi on Monday tweeted, “If demonetisation was successful then why hasn’t corruption ended? Why didn’t the black money come back? Why hasn’t the economy gone cashless? Why didn’t terrorism hurt? Why is inflation not controlled?”
Though the government had launched its sudden move of demonetisation to cull out black money by weeding out currency notes worth 500 and 1,000 rupees denomination out of the system, on November 8, 2016, the notes in circulation in value terms have increased by 64 percent since that day till October 29, 2021.
According to data released by the Reserve Bank of India (RBI), notes in circulation (NIC) in terms of value, went up from ₹ 17.74 lakh crore on November 4, 2016 (just four days before demonetisation was announced), to ₹ 29.17 lakh crore on October 29, 2021, an increase of 64 percent.
This shows that the other purpose of demonetisation, i.e. promotion of digital payments, has not impacted cash transactions much. Many described demonetisation as a sort of surgical strike against corruption.