On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series.

2. DEMONETIZATION
• Demonetization is the act of
stripping a currency unit of its status
as legal tender. It occurs whenever
there is a change of national
currency: The current form or forms
of money is pulled from circulation
and retired, often to be replaced
with new notes or coins.

3. 2016 Indian banknote
Demonetization
• On 8 November 2016, the Government of
India announced the demonetisation of all ₹500
and ₹1000 banknotes of the Mahatma Gandhi
Series.

4. • Indian Prime Minister Narendra
Modi announced the demonetisation
in an unscheduled live televised
address at 20:00 Indian Standard
Time (IST) on 8 November.
• PM Modi declared that use of all ₹500
and ₹1000 banknotes of the Mahatma
Gandhi Series would be invalid past
midnight, and announced the issuance
of new ₹500 and ₹2000 banknotes of
the Mahatma Gandhi New Series in
exchange for the old banknotes.
• By the end of August 2017, 99% of the
banned currency had been deposited
in banks:

5. Demonetisation process
• The plan to demonetize the ₹500
and ₹1000 banknotes was initiated
between six and ten months before it
was announced
• Kept confidential, with only ten people
being completely aware of it.
• The Union cabinet was informed about
the plan on 8 November 2016 in a
meeting called by the Indian Prime
Minister Narendra Modi.

6. Exchange of old notes
• The RBI stipulated that the
demonetized notes could be
deposited with banks over a
period of fifty days until 30
December 2016.
• The limit for such exchange
was ₹4,000 per person from 8
to 13 November, was
increased to ₹4,500 per
person from 14 to 17
November, reduced to ₹2,000
per person from 18
November.

7. • International airports also
facilitated an exchange of notes
for foreign tourists and out-bound
travelers, amounting to a total
value of ₹5,000 per person.
• The exchange of banknotes was
stopped completely on 25
November.

8. Withdrawal limits
• Cash withdrawals from bank
accounts were restricted to
₹10,000 per day and ₹20,000
per week per account from 10
to 13 November.
• This limit was increased to
₹24,000 per week from 14
November 2016.

9. • A daily limit on
withdrawals from ATMs
varying from ₹2,000 per
day till 14 November
and₹2,500 per day till 31
December.
• The limit was increased
to ₹4,500 per day from 1
January, and again to
₹10,000 from 16 January
2017.

10. • RBIincreased the withdrawal limit
from SB a/c to ₹50,000 from the
earlier ₹24,000 on 20 February 2017 and
then on 13 March 2017, it removed all
withdrawal limits from Savings Bank
Accounts.
• As per Revised guidelines, families were
allowed to withdraw ₹2.5 lakh for
wedding expenses from one account
provided it was KYC compliant.
• The rules were also changed for farmers
who are permitted to withdraw ₹25,000
per week from their accounts against
crop loan

11. Ordinance
• Imposed fines on people found carrying out
transactions with them after 8 November 2016; or
holding more than ten of them after 30 December
2016.
• The ordinance also provided for the exchange of
the bank notes after 30 December for non-
resident citizens and others on a case by case
basis.[
• Fuel pumps, government hospitals, railway and
airline booking counters, state-government
recognized dairies and ration stores, and
crematoriums were allowed to accept the banned
₹500 and ₹1,000 bank notes until 2 December
2016

12. Information leaks

13. • A fortnight before the official announcement, a news report in the Hindi
daily Dainik Jagran quoting RBI sources speaking of the planned
release of new 2000 rupee notes alongside withdrawal of 500 and 1000
rupee notes.
• Similar news was reported in The Hindu Business Line, describing a
forthcoming 2000 rupee note and the possible withdrawal of 500 and
1000 rupee notes
• A BJP MLA from Rajasthan, Bhawani Singh Rajawat, claimed in a
video that wealthy businessmen were informed about the
demonetisation before it occurred. He later denied the comments.
• More than 30 politicians belonging to the BJP were arrested and
investigated for having unaccounted money in the new 2000 rupee
denomination.

14. Criticism
The Indian Supreme Court while hearing one
among a slew of cases filed against the sudden
demonetization decision in various
courts, observed that it "appears to be carpet
bombing and not surgical strike" which
government repeatedly claims it to be.

15. Chief Ministers of several Indian states like Mamata Banerjee, Arvind
Kejriwal and Pinarayi Vijayan] have criticised and led major protests against
the decision in their states and in parliament. Initially, the move to
demonetise and try to hinder black money was appreciated, but the manner
in which it was carried out by causing hardships to common people was
criticised

16. • Several government ministers had
declared before the demonetisation that
they were holding large amounts of cash,
including Arun Jaitley, who had more than
65 lakh rupees in cash.
• This led to speculation about whether
and when the ministers had deposited the
cash they held

17. • A Parliamentary panel report in April
2017 stated that rural households and
honest taxpayers were the worst hit by
demonetization.
• It said that it was not just the poor that
suffered, but the manufacturing sector
was impacted too.
• According to the panel, demonetisation
created significant disruption throughout
economy, because it was carried out
without prior study or research

18. Opposition
• Demonetisation was opposed in both houses of
the parliament, it triggered organised nationwide
strikes across India.
• Opposition parties like Indian National
Congress, Bahujan Samaj Party, Trinamool
Congress, DMK, JD(U), AIADMK,Nationalist Congress
Party, Left, Rashtriya Janata Dal and the Samajwadi
Party.
• Decided to observe ‘Akrosh Diwas’ as, a protest
campaign and launch protests in front of banks,
demanding that money be returned to people.

19. • The former prime minister of
India Manmohan Singh said "this
scheme will hurt small industries, the farming
sector.
• The GDP can decline by about 3 per cent
due to this move", while he also questioned
"I would like to ask the Prime Minister
examples of countries where people have
deposited their money in the banks and not
allowed to withdraw their own money." and
later also said "It is no good that on each day
banks bring out new notifications.
• It doesn't reflect properly on Prime Minister's
Office, Finance Minister and the Reserve
Bank of India. Cooperative banking system
has been prevented from handling cash".
• Singh at last termed the demonetisation
move as an "organised loot, legalised
plunder of the common people".

20. Effects and analysis

21. • The government had
estimated that ₹3 trillion, or
approximately 20%, of the demonetised
notes would be permanently removed from
circulation.
• Modi had stated that due to demonetisation,
corrupt officials, businessmen and criminals
— popularly believed to hoard large amounts
of illicit cash — would be stuck with
"worthless pieces of paper".
• Economic analyst Vivek Kaul stated in
a BBC article that "demonetisation had been
a failure of epic proportions."

22. Human trafficking
• Nobel laureate Kailash Satyarthi and others
working to fight human trafficking said that the
note ban had led to a huge fall in sex trafficking,
but that the trade had already begun
rebounding by the following month.
• Satyarthi said the demonetisation would be
effective in combating exploitation of children as
well as corruption and would be a great obstacle
to traffickers.
• However, two months later he expressed his
disappointment on Rs 2000 notes being pushed
into human trafficking in absence of other
concrete steps.

23. Radical groups
• Dmonetisation had badly hit
Maoist and Naxalites as well.
• The surrender rate has reached its
highest since demonetisation was
announced.
• It is said that the money these
organisations collected over the
years have now lost their value
making them take such a decision.

24. Cash shortage
• The scarcity of cash due to
demonetisation of banknotes,
faced difficulties in exchanging
them due to endless queues
outside banks and ATMs across
India.
• ATMs were running out of cash
after a few hours of being
functional, and around half the
ATMs in the country were non-
functional.

25. • ‘Live ATM Alert’ was a hashtag campaign started by a group of
youngsters from a Facebook community called '7PM Status.
• It launched a campaign for crowdsourcing locations of ATMs in their
vicinity that were live and working.

26. • The public were asked to post
the location and details of
ATMs that were live and
dispensing cash, including a
hashtag #LiveATMAlert or by
tagging the group in their post
in Facebook or Twitter.
• The group would in turn collate
all gathered information and
broadcast it to their followers at
regular intervals.

27. Deaths
• Several people were reported to have died from standing in
queues for hours to exchange their old banknotes.
• Deaths were also attributed to lack of medical help due to
refusal of old banknotes by hospitals.
• By the end of the year, opposition leaders claimed that over
100 people had died due to demonetisation.
• In March 2017, the government stated that they received no
official report on deaths connected to demonetisation.

28. Stock market decline
• As a combined effect of demonetisation and US presidential election, the stock
market indices dropped to an around six-month low in the week following the
announcement.
• The day after the demonetisation announcement, BSE SENSEX crashed nearly
1,689 points and NIFTY 50 plunged by over 541 points.
• By the end of the intraday trading section on 15 November 2016, the BSE
SENSEX index was lower by 565 points and the NIFTY 50 index was below 8100
intraday.

29. Agriculture
• Due to scarcity of the new banknote, difficult to purchase seeds,
fertilisers and pesticides needed for the plantation of rabi crops.
• Farmers and their unions conducted protest rallies.
• The demonetisation led to unavailability of cash to pay for food products.
• The reduction in demand that arose in turn led to a crash in the prices
of crops.
• Farmers were unable to recover even the costs of transportation from
their fields to the market from the low prices offered.
• Agricultural produce such as vegetables, foodgrains, sugarcane, milk
and eggs were dumped on roads.

30. Digital transactions and cashless economy
• Demonetization a significant step towards
making India a cashless economy.
• slogan - ‘Less-cash’ first, ‘cashless
society’ next.
• More people began using cards and e-
wallets, and the demand for point of sales
(POS) or card swipe machines increased.
• Concerns were raised regarding the lack
security of mobile apps used for digital
transactions.
• The government launched an app
called BHIM (Bharat Interface for
Money) based on the Unified Payment
Interface.

31. • Google launched its first India-only banking app using UPI
called Google Tez, that can be used by customers available in
several Indian languages.
• Immediate Mobile Payments System (IMPS) and the Unified
Payments Interface (UPI), which support instant payments using
mobile phones, have grown substantially since demonetisation.
GDP growth
• Global analysts cut their forecasts of India's GDP growth rate
for the financial year 2016-17 by 0.5 to 3 percent due to
demonetisation.
• The GDP growth rate for the quarter April - June 2017 dropped
to 5.7% due to demonetization.

32. Unemployment
• There was a loss of jobs due to demonetisation, particularly in the
unorganised and informal sector and in small enterprises.
• Labour union jobs were crashed.
Tax impacts
• The number of I-T returns filed between 1 April 2017 and 5
August 2017 grew by 24.7 per cent to 2.82 crore over the
same period in 2016, and the advance tax collections
between 1 April 2017 and 5 August 2017 rose 41.8% over the
corresponding period in 2016.

33. People left with old notes
• The government had initially announced that
any person who is unable to deposit the old
notes by 31 December 2016 would be given an
opportunity to do so until a later date.
• Only Non-Resident Indians (NRIs) to deposit
old notes after 31 December 2016.
• People petitioned the courts to allow deposit
of the old banknotes.
• The Supreme Court of India also questioned
the government on this matter.

34. Evasion attempts
Plz add any pic

35. Gold purchases:
• In Gujarat, Delhi and many other major cities, sales of gold increased,
with an increased 20 to 30%.
• Income Tax officials raided multiple branches of Axis Bank and found
bank officials involved in exchanging old notes for gold.

36. Donations in temples
• In India, the cash deposited into hundis, or cash collection
boxes in temples and gurudwaras are exempted from
inquiry by the tax department.
• After the note ban, there was a spike in donations in the
form of the demonetised notes in temples.
Multiple bank transactions
• Restrictions imposed on exchange transactions by
conducting multiple transactions at different bank
branches and also sending hired people, employees and
followers in groups to exchange large amounts of banned
currency at banks.
• Additional measure to ensure that the exchange
transactions are carried out only once by each person.

37. Railway bookings
• The Indian Railways authorities that a large number of people
started booking tickets particularly in classes 1A and 2A for the
longest distance possible, to get rid of unaccounted cash.
• The Railways Ministry and the Railway Board responded swiftly and
decided that cancellation and refund of tickets of value ₹10,000 and
above will not be allowed by any means involving cash.
• The payment can only be through cheque/electronic payment.
• Tickets above ₹10,000 can be refunded by filing ticket deposit
receipt only on surrendering the original ticket.