A Year After PM Modi’s Notes Ban, What’s Changed – And What Really Hasn’t


Our esteemed Prime minister is always on his toes for his undeterred contribution towards India. November 8, 2016, was the day when he planned to uproot the diseases like Black money, corruption, fake currency etc., by announcing India’s biggest ever cash-ban.

He annulled 86% of the currency in circulation, believing to combat the graft and terrorism which are usually capitalized by the fraudulent bills. However, he hasn’t succeeded much in his approach, leading to the diminishing of the Asia’s third-largest economy with the mind-boggling cash ram.

This can result in the ado of the PMs next scheduled elections in 2019, as the growth has tended to slumber when compared to the previous administrations. The predecessors in power were always accused of the huge corruption scandals and policy paralysis, which brought Modi to power in 2014.

“The process of curbing black money and corruption does not begin or end with demonetization,” said Sonal Varma, chief India economist at Nomura Holdings Inc. in Singapore. She also claimed that “Black money is held not just in cash but also real estate and gold.”

PM Modi patiently said that the ban on 500 and 1000 rupee notes was mandatory due to their high-valued bills that escalated the smooth flow of the operations carried by the enemies across the border. He also revealed that the detection of the fake currency has increased within the last 12 months through June 30, which has been 0.08 % of the total currency, compared to the 0.07% in the preceding year. The Reserve bank of India was also accused to be careless about safeguarding the new notes from the counterfeiters.

The Result of PM Modi’s action:

Black Money

The event following soon after the cash ban includes about the third of Rs. 15.44 lakh crore of bills to be invalidated and not be deposited into the banks, which directly implied that Indians would slog their way for forfeiting their stashed money rather than burdening themselves with a dire risk of being detected.

“As almost all cash withdrawn has been translated into a rise in bank deposits, one can question to what extent demonetization has really been effective in wiping out black money,” Arjen van Dijkhuizen, senior economist at ABN Amro Bank NV in Amsterdam, said by email.

Tax Evasion

Swelling of the tax base was one sure shot opportunity, following demonetization. The government promised to monitor the cash flow into the accounts so as to scrutinize the tax dawdlers.

“The exercise changed the public’s perception of what the government can, and will do to root out corruption,” confessed Shailesh Kumar, senior analyst for Asia at Eurasia Group. “In some ways, PM Modi was rewarded for it, as he was seen taking on the issue of corruption which many believe is one of India’s biggest problems.”

This effort seemed to bore a fruitful result, when during the elections in Uttar Pradesh; it was PM Modi’s Bhartiya Janata Party that emerged as a winner. However, there has been an increase gush of dissatisfaction in his own state Gujarat, where the growth has been relatively decelerated.

Despite the entire opinioned buzz, the opinion poll is adamant to still call their votes for BJP and also marked Nov 8 as the anniversary of the decision- as anti-black money day every year.

“It is clear that the short-term pains from these currency operations have been more concrete and visible than potential long-term gains, but that does not mean that there aren’t any,” said Dijkhuizen.


This largest cash ban proved to be a vanguard to the digital payment providers, especially Paytm, backed by China’s Alibaba Group Holding Ltd. They have revealed their persistent swelling growth in terms of the customers since the last November.

Demonetization also prompted the record domestic inflows into the mutual funds, which have rushed their ways into the equity market and forced the key indexes to multiple records.

Even though demonetization experienced a down surge as the cash returns in the economy yet the government points the lower level of currency circulation as a win-win situation!

It’s the effect of demonetization that India today is at Rs.12.5 lakh crore high-value bills today, than the previous year’s Rs.18 lakh crore.

Economic Affairs Secretary Subhash Garg estimates. “So the potential of storing black money is so much reduced. You are doing the same economic activity with the money in circulation,”


The stone pelting illustration in Jammu and Kashmir was dipped, post the cash ban but started escalating again. This abrupt plunge in the riotous brutality is still not clear, but surprisingly, it happened!


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