{"id":88424,"date":"2026-11-10T18:03:58","date_gmt":"2026-11-10T12:33:58","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=88424"},"modified":"2026-11-10T18:04:00","modified_gmt":"2026-11-10T12:34:00","slug":"10-years-of-demonetisation-in-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/10-11-2026\/10-years-of-demonetisation-in-india","title":{"rendered":"10 Years of Demonetisation in India"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Ten years after demonetisation, Reserve Bank of India (RBI) data show that the exercise has had little impact on reducing cash in circulation and that detection of counterfeit notes.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Background\u00a0<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Announcement: <\/strong>The government on November 8, 2016, stated that the \u20b9500 and \u20b91,000 notes would cease to be legal tender.<\/li>\n\n\n\n<li><strong>Impact: <\/strong>The measure wiped out about<strong> 86%<\/strong> of the value of the cash in circulation.<\/li>\n\n\n\n<li><strong>Objectives:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Curb black money and corruption.<\/li>\n\n\n\n<li>Eliminate counterfeit currency.<\/li>\n\n\n\n<li>Disrupt terror financing and hawala transactions.<\/li>\n\n\n\n<li>Promote digital payments and a less-cash economy.<\/li>\n\n\n\n<li>Encourage the economy&#8217;s formalisation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group has-background\" style=\"background-color:#ebecf0\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h3 class=\"wp-block-heading\"><strong>Earlier Instances of Demonetisation in India<\/strong><br><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Demonetisation of 1946: <\/strong>During the Second World War, the British Indian Government had withdrawn the legal tender character of high denomination notes of <strong>Rs. 500, Rs. 1,000 and Rs. 10,000<\/strong> by the High Denomination Bank Notes Ordinance, 1946.<\/li>\n\n\n\n<li><strong>Demonetisation of 1978:<\/strong> The government withdrew <strong>\u20b91,000, \u20b95,000 and \u20b910,000 <\/strong>notes from circulation.\n<ul class=\"wp-block-list\">\n<li>It was Implemented by the <strong>High Denomination Bank Notes (Demonetisation) Act, 1978.<\/strong><\/li>\n\n\n\n<li>This was as per the recommendations of the <strong>Wanchoo Committee (Direct Taxes Inquiry Committee)<\/strong> which had enquired into black money and tax evasion.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Findings After 10 Years<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Limited Reduction in Cash Circulation: <\/strong>Currency with the public as a percentage of GDP has remained largely unchanged.\n<ul class=\"wp-block-list\">\n<li>Currency with the public as a percentage of GDP stood at<strong> 11.9% <\/strong>in <strong>2015-16<\/strong>, the financial year preceding demonetisation, and rose marginally to <strong>12.1%<\/strong> by March 31, 2026.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>The value of UPI transactions <\/strong>as a percentage of GDP has grown from zero in 2016-17 to nearly <strong>91% in 2025-26.<\/strong><\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img data-dominant-color=\"d8e4f5\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"667\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/11\/image-48-1024x667.png\" alt=\"\" class=\"not-transparent wp-image-88425\" style=\"--dominant-color: #d8e4f5; aspect-ratio:1.535254305051832;width:588px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/11\/image-48-1024x667.png 1024w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/11\/image-48-300x196.png 300w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/11\/image-48-768x500.png 768w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/11\/image-48.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Curbing Counterfeit Currency:<\/strong> Across all denominations, counterfeit notes detected per one crore notes in circulation declined from <strong>70.1 in 2015-16 to 13.4 in 2025-26.<\/strong>\n<ul class=\"wp-block-list\">\n<li>However, the detection of counterfeit new-series \u20b9500 notes increased from 0.3 per crore notes in <strong>2016-17 to 20.1 in 2025-26.<\/strong><\/li>\n\n\n\n<li>Detection of counterfeit <strong>\u20b92,000 notes <\/strong>also increased after the RBI initiated their <strong>withdrawal from circulation in 2023.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Supreme Court Judgement<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>In Vivek Narayan Sharma v. Union of India (2023)<\/strong>, a five-judge Constitution Bench of the Supreme Court <strong>examined the legality of the 2016 <\/strong>demonetisation decision.<\/li>\n\n\n\n<li>The Supreme Court <strong>upheld the validity <\/strong>of the demonetisation exercise.<\/li>\n\n\n\n<li>It held that the Central Government could exercise its powers under <strong>Section 26(2) of the RBI Act, 1934,<\/strong> on the recommendation of the RBI&#8217;s Central Board.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Improve coordination<\/strong> among RBI, Financial Intelligence Unit-India (FIU-IND) and enforcement agencies to identify suspicious financial transactions and curb money laundering.<\/li>\n\n\n\n<li><strong>Target Sources of Black Money: <\/strong>Focus on benami properties, shell companies, tax evasion and undisclosed assets rather than relying primarily on currency withdrawal.<\/li>\n\n\n\n<li><strong>Improve Tax Compliance: <\/strong>Simplify tax procedures, strengthen information-sharing and encourage voluntary tax compliance to reduce the informal economy.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/business\/10-years-since-demonetisation-cash-usage-unchanged-fake-notes-on-the-rise\/article71673986.ece\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context <\/strong><\/p>\n<li class=\"ms-5\"> Ten years after demonetisation, Reserve Bank of India (RBI) data show that the exercise has had little impact on reducing cash in circulation and that detection of counterfeit notes.<\/li>\n<p><\/p>\n<p><strong> Background\u00a0<\/strong><\/p>\n<li class=\"ms-5\">Announcement: The government on November 8, 2016, stated that the \u20b9500 and \u20b91,000 notes would cease to be legal tender. <\/li>\n<li class=\"ms-5\">Impact: The measure wiped out about86% of the value of the cash in circulation. <\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/uncategorized\/10-11-2026\/10-years-of-demonetisation-in-india\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-88424","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/88424","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=88424"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/88424\/revisions"}],"predecessor-version":[{"id":88432,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/88424\/revisions\/88432"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=88424"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=88424"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=88424"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}