Chirag Desai

The black money exit


News of an announcement flickered in around 7.50 p.m. IST, an address to the nation was on the cards. What followed is fairly accurately described as India’s biggest take on black (think money acquired through non-documented means) money. Some quick facts:

If we look at how this has come full circle since 2014, when the new Govt. took over, you can almost see the plan coming together:

Yes, there will be an inconvenience around getting all the existing notes into banks; and while businesses and shopkeepers refuse to accept the old notes. If people however give it a chance, and look beyond the next few weeks, a massive move towards accounted, and cashless economy is in the offing. But stories are already coming out of shopkeepers who are offering items on credit until the new notes trickle out.

Spare a thought for those who hoarded black money over years and years, stored in the highest denominations, in cash, that just became food wrappers. Being unable to deposit this money in banks today, unable to exchange it for gold or other goods stifles them in ways that are unexpected. Add to that the announcement being made post 8 p.m., barely 4 hours before closing and post close of markets. It is being said that it was a closely guarded announcement between the Prime Minister, Finance Minister and RBI Governor. I wouldn’t be surprised if most/all in the Cabinet were unaware until their meeting the hour before the announcement, as evidenced by the lack of understanding within the media what the announcement was for, until it was actually made.

This was indeed a colossal move. Watch it unfold.

Update, 10 Nov: