ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Demonetisation Crisis


Though Prime Minister Narendra Modi’s decision on demonetisation of high denomination currency to curb black money circulating in the Indian economy is laudable, its implementation is unplanned and hasty, and has led to a cash crisis across the country, negatively affecting the common man. Although it is still unknown if the targeted results of demonetisation were achieved, the unplanned act immediately caused great inconvenience and several problems for ordinary people directly and indirectly to their day-to-day life and livelihoods. The reasons for this are many.

The high denomination notes—₹500 and ₹1,000—constitute about 86% of the total currency circulated in India at the time of demonetisation. Thus, there was (and still is) a shortage of small deno­mination notes of ₹100 and below (they constitute only 14% of the total currency circulated until 8 November 2016), which is why ₹100 notes are often unavailable in ATMs most of the time. Without addressing the problem of shortage of small denomination notes in circulation, the sudden decision on demonetisation of ₹500 and ₹1,000 notes led to a cash crunch and crisis.

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