DOI link for Demonetization
On 8 November 2016, the Government of India embarked upon one of the most radical monetary interventions in modern times. It did so by instantly demonetizing 85% of its paper cash in circulation with just a few hours of notice. The radical nature of this intervention also has to be understood in the context of an economy that has always been centred upon cash payments, relatively little of which passes through the banking sector. To pronounce a cashless future in an economy where debit cards have become predominant is one thing, but to do so in the Indian context constituted a massive leap of faith. Given Prime Minister Narendra Modi’s close relationship with Silicon Valley entrepreneurs and the huge potentials of the Indian market for microfinance, it is hardly surprising that international commentators rushed to praise the bold vision being applied in the overnight shift to a cashless society, an agenda that is being widely promoted across much of the world. One year on, however, it has become evident that this momentous decision was an economic disaster. This chapter reflects upon India’s year of demonetization and provides a critical interrogation of the assumptions underpinning the cashless agenda.