Context: Indian Prime Minister recently said that Demonetisation has helped reduce black money, increase tax compliance and formalization and given a boost to transparency.


  • On 8 November 2016, the government announced in its historic move to crunch high-denomination notes that constitutes 86% of the currency in the economy.
  • The exercise spread chaos in the cash-dominated informal economy breaking supply chains and crippling small businesses and big businesses in some or the other manner.
  • The Reserve Bank of India (RBI) issued over 60 circulars on the rules pertaining to cash/withdrawal and deposits in the following weeks. Confusion prevailed across different walks of life.

The motive of the crunch intended for the following objectives:

  • Curbing black money in the economy in the form of cash
  • Terminating cash-based corruption
  • Killing fake currency
  • Curbing terrorist activities
  • Pushing digital transactions
  • Widening the tax base

The positive impacts of demonetisation


Source: PIB

Source: telegraph