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Five years of demonetisation: A quick look at how it affected the economy

Despite the government’s attempts to encourage payment digitization and discourage cash transactions, cash transactions in the country continue to rise gradually.

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Five years of demonetisation

By: Kritika Bobal

It was a normal day for everyone until 8:15 p.m. when Prime Minister Narendra Modi jolted the country by stripping a monetary unit of its legal tender status. PM Modi stated that Rs 500 and Rs 1,000 notes—86 percent of all currency notes in circulation in terms of value—would be pulled from the circulation and will no longer be accepted as legal tender after 12 a.m.

In compensation for the demonetised banknotes, it also announced the issuance of new 500 and 2,000 currency notes. This sudden announcement not only tremored the souls of the poor but also affected the middle-class people, mainly the businessmen.

The country’s unorganized sector, which includes small-scale companies and micro home units, collapsed overnight. Millions of such units that relied on real currency watched their banknotes degrade into mere scraps of paper overnight. To compensate for the loss incurred during the fiscal term, the organized sector was forced to lay off workers.

The objective of demonetisation was to eradicate black money, reduce the use of fake notes, increasing digitization, and ease the transition of India’s non-formal sector into a formal sector. However, the idea backfired substantially in the days that followed, as persistent cash shortages disrupted people’s daily lives.

Five years of demonetization: A quick look at how it affected the economy

People who wanted to exchange their money had to wait in long queues, and numerous people died around the nation. The crisis continued, and individuals in misery waited for hours in front of banks, even after December 30, 2016, the final day the RBI allowed residents to deposit their old notes.

Despite fears of an economic disaster hovering over the country in recent years, the economy has managed to leapfrog in recent years, five years after the government declared demonetisation. Despite the government’s attempts to encourage payment digitization and discourage cash transactions, cash transactions in the country continue to rise gradually. Similarly, the country’s cash-to-GDP ratio fell from 12 percent as a result of demonetization but recovered in later years.

Read Also: Punjab CM: Petrol price cut by Rs 10, diesel by Rs 5

According to National Crime Records Bureau statistics, the number of reported instances for making Fake Indian Currency Notes increased 190.5 percent from 2019 to 2020, an 11.7 percent increase. Similarly, there was an 11.7 percent rise in occurrences of counterfeit cash notes in 2019 compared to 2018.

In Tamil Nadu, a 65-year-old visually impaired man has filed a petition with the Krishnagiri district collector’s office, requesting to exchange his old demonetized notes of Rs 500 and Rs 1,000, amounting to Rs. 65,000 in total. He stated that the money was his life savings, which he earned via begging.

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Amit Shah counters delimitation concerns, says southern states to gain Lok Sabha seats

Amit Shah assures Parliament that southern states will gain Lok Sabha seats after delimitation, countering opposition criticism during the women’s reservation debate.

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Amit Shah

Union Home Minister Amit Shah on Thursday addressed concerns over the proposed delimitation exercise, asserting in the Lok Sabha that southern states will not lose representation but instead see an increase in their number of seats.

His remarks came during a heated debate linked to the implementation of women’s reservation, where opposition parties have raised fears that population-based delimitation could reduce the political weight of southern states.

Shah rejected these claims, calling them misleading, and said the proposed framework ensures fairness while expanding the overall strength of the Lok Sabha.

Seat count to rise with expansion of Lok Sabha

The government has indicated that the total number of Lok Sabha seats could increase significantly as part of the delimitation process. In this expanded House, the combined representation of southern states is expected to rise from 129 seats at present to around 195 seats.

Shah emphasised that no state will lose seats in absolute terms, and the exercise is designed to reflect population changes while maintaining balance across regions.

State-wise projections shared in Parliament

During his address, Shah also provided indicative figures for individual southern states, suggesting notable increases in representation. According to the projections:

  • Tamil Nadu could see its seats rise substantially
  • Kerala, Telangana, and Andhra Pradesh are also expected to gain additional seats
  • Karnataka’s representation may increase as well

These figures were presented to counter the argument that delimitation would disproportionately favour northern states.

Political debate intensifies over linkage with women’s quota

The delimitation exercise has been closely linked to the rollout of women’s reservation, which proposes one-third seats for women in Parliament and state assemblies.

Opposition leaders have questioned this linkage, arguing that tying reservation to delimitation could delay its implementation and raise federal concerns. Some leaders have also warned that the move could impact national unity if apprehensions among states are not addressed.

The government, however, maintains that the reforms are necessary to ensure equitable representation and to align the electoral system with demographic realities.

Centre dismisses ‘false narrative’ on southern states

Shah reiterated that concerns about southern states losing influence are unfounded. He said the delimitation process will increase representation across regions and described the criticism as a “false narrative” aimed at creating confusion.

The issue is expected to remain a key flashpoint as Parliament continues discussions on the women’s reservation framework and related legislative changes.

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PM Modi assures no discrimination in women’s quota, delimitation debate intensifies in Parliament

PM Narendra Modi has assured that women’s reservation will be implemented without discrimination, amid a heated debate over delimitation in Parliament.

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Prime Minister Narendra Modi has assured that there will be no discrimination in the implementation of women’s reservation, as Parliament witnessed a sharp debate over the proposed linkage between the quota and delimitation exercise.

During the ongoing special session, the government reiterated its commitment to ensuring fair representation while addressing concerns raised by opposition parties regarding the timing and structure of the legislation.

The proposed framework aims to reserve 33 percent of seats for women in the Lok Sabha and state assemblies. However, its implementation is tied to a fresh delimitation exercise, which is expected after the next census.

Opposition questions timing and intent

Opposition leaders have raised concerns that linking the women’s quota to delimitation could delay its implementation. They argue that the process of redrawing constituencies may push the actual rollout further into the future.

The issue has triggered a broader political confrontation, with multiple parties questioning whether the move could alter representation across states.

Some critics have also alleged that the delimitation exercise could disproportionately benefit certain regions based on population, a charge the government has rejected.

Government reiterates commitment to fair implementation

Responding to these concerns, the Centre has maintained that the reforms are necessary to ensure accurate and updated representation based on population data.

Leaders from the ruling side have repeatedly emphasized that the process will be carried out transparently and without bias. The assurance that there will be “no discrimination” is aimed at addressing fears among states and opposition parties.

The debate marks a key moment in Parliament, with both sides engaging in intense exchanges over one of the most significant electoral reforms in recent years.

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Give all tickets to Muslim women, Amit Shah says, attacking Akhilesh Yadav on sub-quota demand

A sharp exchange between Amit Shah and Akhilesh Yadav in Parliament over sub-quota for Muslim women highlights key divisions on women’s reservation implementation.

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A heated exchange broke out in Parliament during discussions on the women’s reservation framework, with Union Home Minister Amit Shah and Samajwadi Party chief Akhilesh Yadav locking horns over the demand for a sub-quota for Muslim women.

The debate unfolded as the government pushed forward key legislative measures to implement 33% reservation for women in the Lok Sabha and state assemblies.

Akhilesh Yadav argued that the proposed reservation must ensure representation for women from marginalised communities, including Other Backward Classes (OBCs) and Muslim women. He said that without such provisions, large sections could remain excluded from political participation.

He also questioned the timing of the bill, alleging that the Centre was avoiding a caste census. According to him, a census would lead to renewed demands for caste-based reservations, which the government is reluctant to address.

Government rejects religion-based quota

Responding to the demand, Amit Shah made it clear that reservation based on religion is not permitted under the Constitution.

He stated that any proposal to provide quota to Muslims on religious grounds would be unconstitutional, firmly rejecting the idea of a separate sub-quota for Muslim women within the broader reservation framework.

The government has maintained that the existing framework already includes provisions for Scheduled Castes (SC) and Scheduled Tribes (ST) women within the overall reservation structure.

Wider political divide over implementation

The issue of sub-categorisation within the women’s quota has emerged as a major flashpoint, even as most opposition parties broadly support the idea of women’s reservation.

Samajwadi Party leaders reiterated that their support for the bill depends on inclusion of OBC and minority women, while the government continues to defend its constitutional position.

The debate is part of a broader discussion during the special Parliament session, where multiple bills linked to delimitation and implementation of the women’s quota are being taken up.

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