Here is the Mindblowing analysis of demonetisation that will prove that what few media broadcasted was fake inference

What do you think – What is the Objective of Demonetisation?

  1. To reduce cash circulation which is known as Cash to GDP RATIO.
  2. To reduce Higher Denominations participation and to transfer weight towards lower currency
  3. To increase digital transaction
  4. To reduce black cash and convert into formal economy by bringing people to formal banking taxable system.
  5. To make sure those old notes which were earlier being manufactured outside the country make it redundant by making it scrap and manufacturing it inside so that no counterfeiting can be done.
  6. To break down cash work and convert it into formal economy so that government in large get benefit by tax collection.
  7. To reduce cash corruption and trace all past wrong doers and correct the system by rebooting it.
  8. Presence of cash controlled economy was hurting the country as it neither is accounted nor it help the country as cash was commodity and not a mobile asset which it must be.

Did the Government succeed in the Demonetisation?

Yes Government succeeded in accomplishing all the above points.

  1. GOI succeeded in bringing down cash to GDP Ratio from 12.2% to 8.8% which is HUGE.
  2. Higher Denomination share of % in 2016 was Rs 1000 (39%) + Rs 500(48%) which is 87% approximately which got reduced to Rs 2000 (50.2%) + Rs 500 (22.5%) which is 72.7%. It clearly shows shift of 15% approximately towards lower currency.
  3. India witnessed the rise of 55% in digital transaction. Lots of POS, Debit Card and Mobile Banking and Wallets like BHIM is a phenomenal.
  4. Formal Banking is known by total number of direct tax payers and indirect tax payers – Any blind and dumb person on this nation know 56 lakh rise in Tax Payers and 26% jump in direct tax collection and collection of 92000 crore via GST. What does it mean? It means people now are now inclusively part of formal economy instead of going by cash controlled economy.
  5. India now manufacture its own notes – new design, size, colour and scrap old ones whose every credential was present with foreign country making it vulnerable to counterfeit

Absolutely no manufacturing of notes happening outside country

  1. Answer is same as point number 4.
  2. Government allowed voluntary submission of black income received huge amount more than 60,000 crore in a year and trace down 1 lakh + registered Company and deregister it. Along with that 37000 shell hawala companies and raids are happening all across nation because of traceability.

The Operation Clean Money which have been started on 31st January 2017 has also been successful as Rs 17,526 crore undisclosed income have been found and Rs 1003 crore have been seized. 18 lakh Prima Facia Cases are found after scrutinising which was not aligned as per tax paid hence more money to come as all cases have been taken care by Income Tax Department and ED.

  1. In each and every sector formalisation happening – Demonetisation was necessary to reboot and restart the formal demonetisation not the informal one. Be it GST, be it Gold, be it real estate and be it governance delivery and procurement each and everything is going FORMAL.

Now As I answer each and every objective and how government get huge success in demonetisation. We need to understand details more minutely.

It is important as many sensational headlines are distracting people from real facts.

Rs 1000 Notes Demonetised

2015 – 39.3 % of total share

2016 – 38.6 %

2017 – ZERO

Decrease OF 38.6 %

Rs 500 Old Notes Demonetised and New Design came

2015 – 46 %

2016 – 47.8 %

2017 – 22.5 %

Decrease of 25.3 %

Increase in Lower Currency Note

Rs 100 – 9.7 % (2016 to 2017)

Rs 50 –   1.5 % (2016 to 2017)

Introduction of Rs 2000


Hence if you see and can calculate

Higher Denomination Share of % in 2016 was Rs 1000 (39%) + Rs 500(48%) which is approximately 87% which got reduced to Rs 2000 (50.2%) + Rs 500 (22.5%) which is 72.7%. It clearly shows shift of approximately 15% towards lower currency.

Other Important Findings

762,072 pieces of counterfeit notes were detected. Detection rate was 20.4% higher than the previous year. Major counterfeit notes never came back.

Rs 16,000 crore never come back – This was the black Cash which never came back but those which came back via banks in three-two open window schemes is more than 60,000 crore and the amount of black cash which came into bank led to de-registration of 1 lakh companies and 37000 shell companies.

Other than this, Government data-mined bank data and sent IT notice to many which leads to 26.2% of Income Tax rise in collection and approximately 1 crore new tax payer addition in the same period.

At end-March 2017, Currency in circulation amounted to 8.8 per cent of GDP, down from 12.2 per cent in the previous year which is big win.

Expenditure on currency printing rose to Rs 7,965 crore compared to Rs 3,420 crore in 2015-16 that means new notes cost us around 4545cr.

Last but not the least – The major reason: In 2014, when Narendra Modi came, he stopped all manufacturing of currency notes outside the country and hence it was compulsory to scrap old higher denominations and bring new ones. Now India manufactures 100% currency notes with different paper quality, different design, different size so that no country can counterfeit.

There are many more success points of demonetisation but this article only focussed on how India as economy is changing from Informal to formal economy and how numbers give exact evidence of India’s march towards Strong Economy.

Abhishek Kumar