ISAS Insights

The Government of India took the bold and unprecedented move to withdraw the legal tender status of Rs 500 and Rs 1,000 notes on 8 November 2016. This move, designed to check the accumulated stock of black money in the economy, has undeniably created a great deal of hardship to the general public. While long queues form at bank branches and ATMs, the public has generally accepted the hardship in the fulfilment of the larger objective stated by the government. However, the nimble footedness of the government and the Reserve Bank are at test to end the limits placed on the withdrawal of cash. The long term effects of the decision are still to be assessed, but it is feared that in the short term the economy will certainly take a hit. An attempt is made in this study to see how the move has unfolded and assess its consequences for the economy.