When the Prime Minister Narendra Damodardas Modi made an announcement at 8.15 pm on 8th of November, 2016 about demonetisation of the high denomination notes, viz., the Rs 500 and Rs. 1000 currency notes, people had a very mixed response. People initially supported the move thinking that this would help the economy to become clean: the black money would be wiped out, terrorism would be controlled and fake notes would be removed from the economy. But the trouble people had to undertake, reported deaths in the media and the resultant outcome of demonetisation: all had led to diminishing support from the masses. As the basic objectives of demonetisation were found not to be convincing, the Government came out with a grand narrative which included objectives like removing corruption, digitalisation of the economy, formalisation of the economy, increased tax returns, increased tax revenue earning etc.
This paper is an attempt to analyse demonetisation as a process, with particular emphasis on the demonetisation undertaken in November, 2016. The paper starts with basic meaning of demonetisation, why it is undertaken, whether other countries across the world have succeeded or failed with demonetisation, India’s experience with demonetisation, how was demonetisation planned in 2016 and an overall assessment, including the grand narrative that has come up over time.
Table of Contents
- Introduction
- Why is Demonetisation Undertaken?
- Historical Underpinnings
- Successful Cases
- Unsuccessful Cases
- Demonetisation in India
- The Demonetisation of 1946
- The Demonetisation of 1978
- Demonetisation 2016
- Implementation Strategies followed in 2016
- Titbits of Demonetisation 2016
- RBI's Views on the Drive to Demonetisation: The Observations made in the 561st Meeting Minutes of the RBI Board of Directors
- Evaluation of the Basic Objectives of Demonetisation
- The Grand Narrative: Reading the Political Economy of Demonetisation
- Narratives vs Counter-Narratives of Demonetisation
- Is Demonetisation a Total Failure? A Critical Assessment on Select Macro Fronts
Objectives and Key Themes
This paper analyzes demonetization as a process, focusing on the 2016 Indian demonetization. It examines the reasons behind demonetization, the successes and failures of other countries, India's previous experiences, the 2016 planning, and an overall assessment, including the evolving narrative.
- The reasons and objectives behind demonetization policies globally.
- A comparative analysis of successful and unsuccessful demonetization attempts in various countries.
- A detailed examination of India's experience with demonetization, including the events of 1946, 1978 and 2016.
- An assessment of the stated goals of the 2016 demonetization and the subsequent narrative.
- A critical analysis of the macroeconomic impacts of the 2016 demonetization.
Chapter Summaries
Introduction: This chapter introduces the concept of demonetization, defining it as the act of removing a currency unit's legal tender status. It highlights the various reasons for demonetization, including currency system changes, security improvements, and policy implementations aimed at combating corruption or tax evasion.
Why is Demonetisation Undertaken?: This chapter outlines the broad objectives of demonetization across different countries. These objectives include transitioning to a new currency system, replacing old currency with new, improving security features, and implementing state policies to combat issues like corruption, tax evasion, and black money. The chapter sets the stage for a comparative analysis of demonetization efforts in different contexts.
Historical Underpinnings: This chapter presents a comparative analysis of successful and unsuccessful demonetization attempts across various countries. Successful cases, such as those in the UK, Australia, the European Union, and Pakistan, are highlighted for their meticulous planning and positive outcomes. Conversely, the chapter details the negative consequences of poorly planned or executed demonetization drives in countries like North Korea, the Soviet Union, Myanmar, Nigeria, and Ghana. The differences in planning and execution, and their subsequent impacts on the respective economies and populations, are clearly contrasted.
Demonetisation in India: This chapter focuses on India's history with demonetization, detailing the events of 1946 and 1978. It then shifts to the 2016 demonetization, explaining the prime minister's announcement, the immediate public reaction, and the subsequent implementation strategies. The chapter provides a foundational understanding of India's demonetization experiences prior to the event that forms the central focus of the paper.
Titbits of Demonetisation 2016: This section delves into specific aspects of the 2016 Indian demonetization. It includes the Reserve Bank of India's (RBI) perspective on the drive, as evidenced in the minutes of the RBI board meetings, and a critical evaluation of the demonetization's initial stated objectives. This chapter provides a more granular perspective on the policy's implementation and early assessments.
The Grand Narrative: Reading the Political Economy of Demonetisation: This chapter examines the various narratives surrounding the 2016 demonetization in India. It contrasts the government's narrative with counter-narratives, analyzing the political and economic implications of the policy and its effects on various sectors of the economy. A critical assessment of the policy's success or failure based on macroeconomic indicators is also presented.
Keywords
Demonetization, Black money, Digitalization, Formal economy, Grand narrative, India, Macroeconomic impact, Comparative analysis, Policy implementation, Currency system.
Frequently Asked Questions: A Comprehensive Language Preview on Demonetization
What is the main topic of this document?
This document provides a comprehensive overview of demonetization, focusing primarily on the 2016 demonetization in India. It analyzes the reasons behind demonetization policies, compares successful and unsuccessful cases globally, details India's past experiences, and critically assesses the 2016 event's impact.
What are the key objectives of the document?
The document aims to analyze demonetization as a process, exploring the reasons behind it, comparing successful and unsuccessful implementations in various countries, examining India's historical context, and providing a critical assessment of the 2016 demonetization in India, including its macroeconomic impacts and evolving narrative.
What topics are covered in the document's chapters?
The document covers: an introduction to demonetization; reasons for undertaking demonetization; a historical comparative analysis of successful and unsuccessful demonetization attempts; a detailed examination of India's demonetization experiences (1946, 1978, and 2016); a specific look at the 2016 Indian demonetization, including RBI perspectives; and finally, an analysis of the political and economic narratives surrounding the 2016 demonetization and its macroeconomic impact.
What are some specific examples of successful and unsuccessful demonetization attempts discussed?
The document highlights successful demonetization in countries like the UK, Australia, the European Union, and Pakistan, contrasting them with unsuccessful attempts in North Korea, the Soviet Union, Myanmar, Nigeria, and Ghana. The analysis focuses on the differences in planning and execution and their consequences.
What is the document's approach to the 2016 Indian demonetization?
The document provides a detailed examination of the 2016 Indian demonetization, including the government's announcement, public reaction, implementation strategies, the RBI's perspective (as reflected in meeting minutes), and a critical evaluation of its stated objectives and actual macroeconomic consequences.
How does the document analyze the narrative surrounding the 2016 demonetization?
The document explores the competing narratives surrounding the 2016 demonetization, comparing the government's perspective with counter-narratives, and analyzes the political and economic implications of the policy and its effects on different sectors. A critical assessment of the policy's success or failure based on macroeconomic indicators is also included.
What are the key terms and concepts used in the document?
Key terms include demonetization, black money, digitalization, formal economy, grand narrative, macroeconomic impact, comparative analysis, policy implementation, and currency system.
Who is the intended audience for this document?
The intended audience appears to be academics and researchers interested in the economic and political aspects of demonetization, particularly in the context of India's 2016 experience. The structured and professional presentation suggests an academic or research-oriented purpose.
What is the overall conclusion or assessment of the 2016 demonetization presented in the document?
While the document presents a comprehensive analysis, a definitive conclusion on the overall success or failure of the 2016 demonetization is not explicitly stated. Instead, it provides the reader with the information and analysis needed to form their own informed conclusion based on the presented evidence and perspectives.
- Citar trabajo
- Bhaskar Sarmah (Autor), 2018, Demonetisation 2016. A Narrative of Political Economy and Beyond, Múnich, GRIN Verlag, https://www.grin.com/document/492151
