Prime minister Narendra Modi’s announcement on November 6 2016, demonetising Rs 1000 and Rs 500 notes in circulation was unprecedented on several counts. The stated objective of the move was to end corruption, manage black money, and promote a cashless economy by pushing digital transactions. The note ban led to a crisis of sorts due to the unplanned nature of its implementation and resulted in a shortage of currency notes in the system. The crisis waned when the new bank notes became available and it led to the creation of a digital payments ecosystem in the country.

The most important objective of demonetisation, according to the pronouncements of officials, was to curb the growth of black money in the Indian economy. There is no clear indication on how successful the move was in curbing black money as data is not available. Ending the black economy will need major institutional and behavioural changes. However, the number of people filing income tax returns shot up from 7 crore to 11 crore in a matters of 3-4 years, showing a major shift to the formal economy.

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