What are your views on ban of 500 and 1000 rupee notes in India?

The ban on 500 and 1000 rupee notes in India, announced on November 8, 2016, was a significant economic policy decision by the Government of India. Here are some key perspectives on this event:

Economic Impact

• Cash Shortages and Economic Disruption: The move led to severe cash shortages, causing widespread disruption in the economy. People faced difficulties in exchanging or depositing the demonetized notes due to long queues at banks and ATMs1.
• Impact on GDP and Employment: The demonetization is believed to have reduced India's GDP growth rate and led to job losses, with estimates suggesting around 1.5 million jobs were lost1.

Effectiveness in Reducing Black Money

• Deposits and Black Money: Despite the government's intention to curb black money, nearly 99.3% of the demonetized notes were deposited back into banks, indicating that the move did not significantly reduce black money1.
• Criticism from Economists: Many economists criticized the move as poorly planned and ineffective in addressing black money, as most black money is not held in cash1.

Digital Transactions and Financial Inclusion

• Increase in Digital Transactions: The demonetization did lead to an increase in digital and cashless transactions across India, which was one of the government's objectives1.
• Financial Inclusion: The push towards digital payments helped in promoting financial inclusion, although the immediate benefits were overshadowed by the economic disruption.

Political and Social Reactions

• Mixed Reactions: The decision received mixed reactions from politicians and industrialists. Some supported it as a measure to curb black money, while others criticized its execution and impact on the economy1.
• Legal Challenges: The move faced legal challenges, with several petitions filed in courts questioning its legality and implementation1.

In summary, while the demonetization aimed to reduce black money and promote digital transactions, its execution and immediate economic impact were widely criticized. The long-term benefits of increased digital transactions are acknowledged, but the move is generally seen as not achieving its primary goal of reducing black money effectively.