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Phoenix666 [soylentnews.org] writes:

On November 8, 2016, India’s Prime Minister Narendra Modi [aljazeera.com] in a shock decision declared all 500 and 1,000 rupee notes to be "worthless pieces of paper" from midnight onwards [aljazeera.com]. This surprise demonetisation sucked out 86 percent of cash from circulation, ostensibly in an attempt to flush out unaccounted wealth, or "black money".

More than one billion Indians had less than eight weeks to return all of their old notes. For the nation’s largely cash-based society, this unprecedented move induced a period of chaos. [aljazeera.com] Banks scrambled to keep up while lines trailed out their doors [aljazeera.com] and around street corners. Life's basic daily transactions screeched to a standstill as people struggled to withdraw cash, causing immense stress [aljazeera.com] and even death in some cases.

The country's finance ministry's recently published Economic Survey 2016-17 admits that the demonetisation caused short-term damage in the form of "job losses, decline in farm incomes [and] social disruption, especially in cash-intensive sectors". It also concedes that the official GDP underestimates the costs of demonetisation.

However, the Survey is banking on long-term benefits, [aljazeera.com] such as "reduced corruption" and a more formalised economy, which could lead to a "greater GDP growth" and "greater tax revenues".

Could a better designed demonetisation tactic help elsewhere?

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