The Demonetization Dilemma – boon or suppression of the supressed?
On 8th of November 2016, at approximately 8PM, the central government of India invoked a  nationwide recall of Rs. 1000 and Rs. 500 currency notes which mandated individuals to deposit their cash assets for exchanging and accessing new currency notes and that’s when India got familiar with the phenomenon called “Demonetization”. So what exactly is demonetization? – It is a phenomenon when a currency unit is stripped off it’s legal validity, essentially devaluing the cash possession’s worth to zero. This is mostly observed at a national level and has sometimes been a consequence of nation / government fallouts such as ruble, franc etc devaluations Demonization is always challenging for any nation to see through. It can cause major civil
distress and chaos along with growing risks towards an economic downturn due to reduced purchase power of its citizens. Witnessing this historic event and its aftermath, we know that the above predictions didn’t hold true in India’s case, it also brought throttled the corruption and backfilled the government
treasury unleashing tons of black money being circulated and while we might consider this a success, we need to take a deeper look at the problems this event entailed, some of which could not be represented as a tangible metric. The middle class was severely affected due to a sudden cash flow crunch introduced by the devaluation and many small to medium businesses had to bear the brunt of it. In the small town of Raipur alone, approximately 300-350 industrial units were shut down and the common man’s economy is yet to recover. As they say – “Blood loss affects life, but money loss affects economic life”. The above analysis is necessary to understand the net benefit of demonization since it was promoted as a means to control cashflow circulation and reveal black money. According to statistics, the currency in circulation in the country was Rs 17.74 lakh crore on November 4, 2016, which reached Rs 32.42 lakh crore on December 23, 2022. According to RBI, the use of cash has almost doubled despite the increase in the trend of online payments and we are left
wondering if black money has rapidly seeped through our nation’s cash flow again? The question, however, for this time is – what would a demonization in the current times do, when small businesses already had their backs broken due to the pandemic and the upcoming global financial crisis. And while it really isn’t fit for today’s conditions, why was it fit in 2016? 

Dr. Sampada Bhave Associate Professor
Department of Commerce and Management
Kalinga University Raipur