Demonetization: Success or failure

OP's Perspective

On 8 November 2016, Indian Prime Minister Narendra Modi announced the demonetization all ?500 and ?1000 banknotes of the Mahatma Gandhi Series in an unscheduled live televised address. He also announced the issuance of new ?500 and ?2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.

The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism. Initially, the move received support from several bankers as well as from some international commentators. The move has also been criticised as poorly planned and unfair and was met with protests, litigation, and strikes against the government in several places across India.

As per RBI’s annual report for 2017-18 which was published on Aug 29, 2018, Rs 15.31 lakh crore notes were returned out Rs 15.44  lakh crore notes that were demonetized. It means about 99.3% of the demonetized currency returned to banks. Does it mean Demonetization was a failure?

Let's discuss whether demonetization was a success or failure.