NEW DELHI, NOV 8 (AGENCIES): Ten years after Prime Minister Narendra Modi announced the withdrawal of Rs 500 and Rs 1,000 notes, questions remain over demonetisation’s objectives of curbing black money, counterfeit currency and cash dependence. The move invalidated 86% of currency in circulation by value.
The RBI’s 2017-18 annual report showed that Rs 15.31 lakh crore of the Rs 15.42 lakh crore in withdrawn notes, or 99.3%, returned to the banking system. Economist CP Chandrasekhar said this contradicted expectations that substantial unaccounted cash would remain outside banks.
Jayati Ghosh and Parakala Prabhakar noted that black wealth is also held in financial channels, offshore accounts, gold, land and buildings.
RBI figures show currency with the public rose from 11.9% of GDP in 2015-16 to 12.1% by March 31, 2026.
Digital payments, particularly UPI, expanded rapidly. UPI accounted for 85% of payment transactions by volume in 2025, though only 9.5% by value.
Counterfeit notes detected across denominations fell from 70.1 per crore notes in 2015-16 to 13.4 in 2025-26. However, counterfeit Rs 500 notes rose from 0.3 per crore in 2016-17 to 20.1 in 2025-26.
Economists highlighted the disruption to the cash-dependent informal economy.
Ghosh said income losses among informal workers and small businesses affected demand and recovery. Around 85% of workers were employed in informal enterprises. GST, introduced in July 2017, added pressure on small businesses.
The economic cost was never formally quantified. Independent estimates cited by Scroll.in put output losses at 1% to 2.5% of GDP in 2016-17. It also reported no immediate surge in personal income-tax collections, despite over 4.5 lakh suspicious transaction reports filed in 2016-17 overall.
Monday, November 9, 2026