When the whole world waited anxiously for the next US President, Prime Minister Narendra Modi on November 8, announced a bold and historical move to demonetise the ₹1000 and ₹500 notes. The aim of the move was to fight corruption by restoring black money and tackling the growing menace of counterfeit currency. This goal later transformed into making India digital. Initially hailed as a masterstroke, the public outcry over a lack of cash exposed the lack of preparedness on the part of the government. Demonetisation sucked out 86% of the currency out of the system.
The new size and design of the currency made it a daunting task to re-calibrate the 2,20,000 ATMs. Around 90% of the ATMs were re-calibrated by December 1, but many of them were still out of cash. Kaushik Basu, former Chief Economist of World Bank said, “Demonetisation may have been well-intentioned, but it was a major mistake.” The Central Statistics Office predicted the lowest GDP in three years to 7.1. The IMF later predicted a further dip to 6.6%. IMF said that India was no longer the fastest growing economy.
According to reports by central intelligence agencies, the violence in Kashmir abated by 60%. The human trafficking rate also slowed down due to demonetisation. But, whether this can be seen as a permanent solution to such problems is still an intimidating question. India is a cash-based economy with 90% of its transactions done in cash. A step-wise approach is required in order to turn it into a cashless society. A society evolves into a cashless society, it cannot be enforced.
Even a developed economy like the USA only does 45% of its transactions without using cash. Being cashless is not the only sign of development. Around 90% of the old notes are back in banks. In Venezuela, the government had to revoke its note ban decision within a week after a mass public outrage. But in India, the common man contributed to a peaceful transition after the bold move. This somewhere highlights the high expectations of the public from the government.