On November 8, 2016, the Prime Minister announced the withdrawal of ₹500 and ₹1000 currency notes. Patients died despite having money they could not use. Marriages were canceled. More than 100 people, including bank staff, died. Long queues in banks for exchanging ₹2000 and ₹4000 were everywhere. The poor were the most affected, while the rich did not face problems. They deposited their money in their accounts and did not need exchanges. Former Finance Minister Mr. P. Chidambaram stated he suspected fresh currency from the RBI printing press had reached select individuals, as large sums of fresh currency were found with a few people—all fresh ₹2000 notes. How they got it? Two examples include currency seized from the office and residence of Mr. Ram Mohan Rao, former Chief Secretary to the Tamil Nadu Government, and his son’s office, as well as from Mr. Sekar Reddy’s offices and residences. Mr. Sekar Reddy was a contractor and a trustee of the Tirupathi Devasthanam Board (Financial Express, Dec. 22, 2016). As Vice President of the All India Bank Officers’ Confederation, I demanded that the RBI provide the police with the serial numbers and denominations of fresh notes given to different currency chests so the police could trace which bank issued the notes. ₹34 crore in fresh currency was seized from Sekar Reddy and two others. One year after demonetisation, a report released at a seminar at JNU listed 102 cases widely reported in the press, yet no one has been punished. The RBI never shared details with the police. Private banks received more fresh currency, even as longer queues formed at public sector banks. The AIBOC and United Forum of Bank Unions held demonstrations in front of the RBI in Chennai against this discrimination. I demanded the resignation of the RBI Governor at a public meeting at the Constitution Club, New Delhi, as his signature was on the currency notes. He resigned much later, and it is now known that the RBI was forced to accept demonetisation, an unscientific move that proved disastrous. The Prime Minister had announced that 50 days of suffering for the people would bring an end to black money, corruption, fake currency, and terrorism. He also stated that people could punish him if these outcomes did not materialise (Hindustan Times, Nov. 13, 2016, and a video by ANI on X platform).
Black Money
Eight years later, cash in circulation has increased from ₹17 lakh crore in 2016 to ₹34 lakh crore in 2024. As per IMF estimates, black money in India is 50% of GDP (₹21.82 lakh crores), while the CBI estimates it at ₹28 lakh crore, and the World Bank estimates it at 20% of GDP. A report in March 2018 stated that Indian black money in Swiss and other offshore banks was estimated to be ₹300 lakh crore. In every election, we see crores of cash distributed, and MLAs are bought with lakhs of crores of cash. Is this not black money?
Corruption in India
According to Transparency International’s Corruption Perception Index, India ranked 93rd among 180 countries in 2023, a ranking indicating high levels of corruption. Every Indian today knows how corruption has increased in the country. Corporates lead the corruption, and even the poor are paying for getting their dues.
Fake Notes
Number of notes caught in 2020-21 was 208625, in 2021-22, it was 230971 and in 2022-23 it was 225769. In 2015-16 it was 105973. One reason suspected for abolishing the ₹2000 denomination notes is the circulation of fake notes.
Terrorism
Terrorism has not stopped. J&K, Chhattisgarh, the Northeast, and other states continue to face terrorism. NSCN in Nagaland has announced that they are going to resume armed struggles. Manipur is filled with terrorist groups. Any way it has nothing to do with demonetization. Terrorists have other ways of mobilizing funds and they could also exchange currency.
Going Cashless
When the government faced criticism for the failure of demonetisation, they announced that it would lead to a cashless economy. Paytm advertisements featured the PM’s photo. Paytm made profits, but is now in crisis. Online transactions and fraud cases have both increased. The UPI platform has led to numerous new frauds. Cash is still the king. In a country where 26% of the population is illiterate, digitalisation deprives a large segment of the population. G-Pay is performing banking services without a banking license, and blockchain transactions have surged. While the RBI Governor has issued warnings, the Finance Minister has announced taxing the transactions. No country has gone entirely cashless, and India cannot do so in the near future. Cash in circulation has more than doubled. It gives a clear message.
Demonetisation has proven to be a Himalayan blunder, an organised loot, and lead to massive destruction for medium, small, and micro-enterprises. The government should accept the mistake, and people should remember the effects of demonetisation. The suffering should not be forgotten.
Thomas Franco is the former General Secretary of the All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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