What is your view on the recent demonetization in India?

The recent demonetization in India, which occurred in 2016, is a complex and multifaceted issue with both positive and negative views depending on the perspective. Here's a balanced analysis:

Positive Views

1. Anti-Corruption Efforts: The demonetization aimed to curb black money and corruption by removing high-denomination notes, which were often used for illicit transactions. It was seen as a bold move to reduce the underground economy and increase transparency5.
2. Financial Inclusion: The policy encouraged people to use digital payment systems and bank accounts, which could enhance financial inclusion, especially for low-income households. The Pradhan Mantri Jan-Dhan Yojana had already provided millions with access to banking5.
3. Long-Term Economic Benefits: Some argue that demonetization could lead to better tax collection, reduced corruption, and a more formalized economy in the long run5.

Negative Views

1. Economic Disruption: The sudden removal of 86% of the currency in circulation led to a massive liquidity crunch, severely affecting the informal sector, which employs a significant portion of India's workforce. This resulted in widespread economic disruption, particularly in cash-intensive sectors like agriculture and small businesses24.
2. Impact on the Poor: The policy disproportionately affected the poor and lower-middle-class populations, who often lack access to digital payment systems and bank accounts. Many suffered significant economic hardship, and some even lost their lives while waiting in lines to exchange currency4.
3. Implementation Issues: The rollout of new currency was slow, and technical issues, such as ATMs not being able to dispense the new 2,000 rupee notes, exacerbated the crisis2.

Political and Social Perspectives

• Public Perception: Despite the economic hardships, a significant portion of the public, including traders, viewed demonetization positively, possibly due to its perceived impact on corruption and the belief that it signaled strong governance2.
• Privacy Concerns: The shift towards digital payments raised concerns about privacy and state surveillance, as personal data became more accessible to authorities4.

In summary, while demonetization had the potential to address corruption and promote financial inclusion, its execution led to significant economic disruption and hardship for many, particularly the poor. The long-term benefits are still debated among economists and policymakers.