Our nominal GDP is Rs.151.91 lakh crore. As of March 2016, the total money circulation in India is worth Rs.16.42 lakh crore. Out of this, the value of all Rs. 500 and Rs.1000 denominations is Rs.14.18 lakh crore. That is, 86% of Rs.16.42 lakh crore is either Rs.500 or Rs.1000. By demonetizing Rs.500 and Rs.1000 notes, the government has demonetised the money worth Rs.14.18 lakh crore. The reasons given by the government are to curb FICN (Fake Indian Currency Notes) and eradicate black money.

1. Out of Rs.14.18 lakh crore money, Rs. 400 crore is said to be in the form of FICN, which is 0.0282% of the total value of all Rs.500 and Rs.1000 denominations.

2. 1% of the Indian population has a major share in the black economy, who have stashed money abroad, in tax havens, P-notes, invested in the real estate sector, and gold.

Though the demonetisation move is welcome, the benefits would be minimal (it bears the implementation cost of Rs. 20000 crore to the government). It can majorly help in curbing terror financing but not in curbing black money. Only small fries will come under financial audit. Also, the introduction of Rs.2000 denomination along with Rs.1000 and Rs.500 is defeating the purpose of fighting black money in the future. However, the move has succeeded in creating a falsified notion among the frustrated youth that the government has done a surgical strike against the black economy. The real masterstroke would be bringing back the major portion of black money into the economy, which is lying safe in different forms within the country and outside the country.

The real affected are not black money hoarders but the poor, illiterate, and middle-class people. A majority of them don’t have a bank/PO account or debit/ATM card or knowledge of money exchange or knowledge of cashless transactions. The government should ensure easy exchange of money, open extra counters for money exchange, and fill ATMs with more cash. Hope this financial chaos, which is heavily affecting the common man, comes to an end soon.