Is India’s Demonetization a Failure?
While short-term indicators show that the Indian government has failed to meet stated objectives, demonetization could be an economic success in the long term.
When Prime Minister Modi announced plans to demonetize ₹500 and ₹1000 notes on November 8, 2016, he said removing black (undeclared) money from the economy would combat both terrorism and corruption.
Data released by the Reserve Bank of India (RBI) indicates that demonetization has failed to flush out black money. Nearly 99 percent of the scrapped notes were deposited into the country’s banks and have re-entered the country’s monetary system.
“So, the main objective of forcing people with black money to suffer losses has failed miserably,” tweeted P. Chidambaram, India’s former finance minister. “Terrorist activity has not abated and black money continues to be generated and used.”
Photo courtesy of Jared Chreup.