On 8 November 2016, India took the dramatic and unprecedented step of demonetising its high denomination Rs 500 and Rs 1000 currency notes, to ‘fight black money, eliminate counterfeit notes and stop terror funding’. The decision prompted fierce and widespread debate. While proponents and opponents have argued on specific aspects of the policy, a holistic view has been absent from the debate.

What was the rationale of demonetisation? Did it stamp out black money and terror funding as promised? Were there options that could have avoided causing immense hardship to countless Indians?

This book—with a 2018 Afterword by the author—is written for every Indian: from the policymaker who wishes to understand the lessons to be learnt from this exercise, to the analyst who wishes to grasp its whys and wherefores, to the ordinary citizen who, bewildered by the turn of events, wants to know if Demonetisation 2016 has helped India in any way. It also explores the drive towards digitalisation of payments which, post-demonetisation, has emerged as a key government agenda.  

C. Rammanohar Reddy is an economist who has been writing on economic policy since the late 1980s. Former editor of the prestigious Economic and Political Weekly (2004–2016), he is editor-designate of The India Forum, the new online publication to be launched in mid-2019.

List of Tables
List of Abbreviations
Foreword by Y. V. Reddy
Preface
Acknowledgements

Demonetisation 2016: An Unfolding Story

Section I
— one —
Black Money and the Black Economy
— two —
Size of the Black Economy in India
— three —
Size of the Shadow Economy in the World
— four —
Indian and Global Experiences with Demonetisation

Section II
— five —
Action on Black Money
— six —
Demonetisation 2016: Context and Options
Appendix: Estimate of Counterfeit Currency
— seven —
Demonetisation 2016: Design and Implementation
Appendix: Growth of High Denomination Notes
— eight —
Promotion of a ‘Less-Cash’ Economy

Section III
— nine —
Distress and Despair
— ten —
Black Money and Politics

Section IV
— eleven —
Cash, Money and Liquidity
— twelve —
Impact on the Banking System
— thirteen —
Impact on the Reserve Bank of India  
Appendix: On the RBI
— fourteen —
Demonetisation, Black Money and Gold
What Next?

Afterword
Bibliography

Annexures

I. Speech of the Prime Minister, 8 November 2016
II. Gazette Notification on Demonetisation
III. Speech of Dr. Manmohan Singh in the Rajya Sabha
IV. Extract from 2012 White Paper

Index