Demonetizing Rs 500 and 1,000 notes will lead to decrease in purchases, profits, investment, income

By Hemantkumar Shah*
The decision to demonetize Rs 500 and Rs 1,000 notes from currency is a macho decision by the government which will have no positive impact on Indian economy.
(1) In 1978, a similar decision was taken by the Morarji Desai government. But the black money volume increased. It did not reduce. A same result will be there this time, too.
(2) In 1978, hardly 10% of people were using these notes. At present, almost all people use these notes. So they will be harassed for exchange.
(3) Poor people will be exploited, as they mostly don't have bank accounts. Private people will get undue benefits from exchanges.
(4) Recently more than Rs 60,000 crore black money was unearthed under the income tax (IT) scheme. No positive impact has been seen in the short run. Nothing will happen in the long run.
(5) As a result of this decision, perhaps another Rs. 50,000 crore will be destroyed by people. It will hardly have any positive impact on income, employment, prices and investment.
(6) It may trigger depression in the economy, already reeling under the same, as unaccounted money is used for buying goods and services. This will stop and my lead to decreased purchases, profits, investment, employment and income in general, and on the short run it may lead to depression.
(7) After 1978, black money increased. It values at present more than Rs 30 lakh crore. It will not be reduced or deleted. Even if it is reduced, it will be of negligible degree.
(8) It will trigger more corruption, which is one of the most effective sources of black money. Those who give cash to banks will be asked for explanations, which will increase corruption. It seems it is election funding programme for the rulers.
It is a bogus, directionless and totally political decision.
---
*Economist, based in Ahmedabad

Comments

Plastic burning in homes threatens food, water and air across Global South: Study

By Jag Jivan In a groundbreaking study spanning 26 countries across the Global South , researchers have uncovered the widespread and concerning practice of households burning plastic waste as a fuel for cooking, heating, and other domestic needs. The research, published in Nature Communications , reveals that this hazardous method of managing both waste and energy poverty is driven by systemic failures in municipal services and the unaffordability of clean alternatives, posing severe risks to human health and the environment.

From colonial mercantilism to Hindutva: New book on the making of power in Gujarat

By Rajiv Shah Professor Ghanshyam Shah ’s latest book, “ Caste-Class Hegemony and State Power: A Study of Gujarat Politics ”, published by Routledge , is penned by one of Gujarat ’s most respected chroniclers, drawing on decades of fieldwork in the state. It seeks to dissect how caste and class factors overlap to perpetuate the hegemony of upper strata in an ostensibly democratic polity. The book probes the dominance of two main political parties in Gujarat—the Indian National Congress and the BJP—arguing that both have sustained capitalist growth while reinforcing Brahmanic hierarchies.

From protest to proof: Why civil society must rethink environmental resistance

By Shankar Sharma* As concerned environmentalists and informed citizens, many of us share deep unease about the way environmental governance in our country is being managed—or mismanaged. Our complaints range across sectors and regions, and most of them are legitimate. Yet a hard question confronts us: are complaints, by themselves, effective? Experience suggests they are not.

Dalit woman student’s death sparks allegations of institutional neglect in Himachal college

By A Representative A Dalit rights organisation has alleged severe caste- and gender-based institutional violence leading to the death of a 19-year-old Dalit woman student at Government Degree College, Dharamshala, Himachal Pradesh, and has demanded arrests, resignations, and an independent inquiry into the case.

Kolkata event marks 100 years since first Communist conference in India

By Harsh Thakor* A public assembly was held in Kolkata on December 24, 2025, to mark the centenary of the First Communist Conference in India , originally convened in Kanpur from December 26 to 28, 1925. The programme was organised by CPI (ML) New Democracy at Subodh Mallik Square on Lenin Sarani. According to the organisers, around 2,000 people attended the assembly.

Economic superpower’s social failure? Inequality, malnutrition and crisis of India's democracy

By Vikas Meshram India may be celebrated as one of the world’s fastest-growing economies, but a closer look at who benefits from that growth tells a starkly different story. The recently released World Inequality Report 2026 lays bare a country sharply divided by wealth, privilege and power. According to the report, nearly 65 percent of India’s total wealth is owned by the richest 10 percent of its population, while the bottom half of the country controls barely 6.4 percent. The top one percent—around 14 million people—holds more than 40 percent, the highest concentration since 1961. Meanwhile, the female labour force participation rate is a dismal 15.7 percent.

Urgent need to study cause of large number of natural deaths in Gulf countries

By Venkatesh Nayak* According to data tabled in Parliament in April 2018, there are 87.76 lakh (8.77 million) Indians in six Gulf countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). While replying to an Unstarred Question (#6091) raised in the Lok Sabha, the Union Minister of State for External Affairs said, during the first half of this financial year alone (between April-September 2018), blue-collared Indian workers in these countries had remitted USD 33.47 Billion back home. Not much is known about the human cost of such earnings which swell up the country’s forex reserves quietly. My recent RTI intervention and research of proceedings in Parliament has revealed that between 2012 and mid-2018 more than 24,570 Indian Workers died in these Gulf countries. This works out to an average of more than 10 deaths per day. For every US$ 1 Billion they remitted to India during the same period there were at least 117 deaths of Indian Workers in Gulf ...

The architect of Congolese liberation: The life and legacy of Patrice Lumumba

By Harsh Thakor* Patrice Émery Lumumba remains a central figure in the history of African decolonization, serving as the first Prime Minister of the independent Republic of the Congo. Born on July 2, 1925, Lumumba emerged as a radical anti-colonial leader who sought to unify a nation fractured by decades of Belgian rule. His tenure, however, lasted less than seven months before his dismissal and subsequent assassination on January 17, 1961.

Venezuela and the crisis of global order: Erosion of rules-based international order

By Vidya Bhushan Rawat* The American attack on Venezuela violates every principle of international law that the collective West claims to uphold. The response from the European Union—“we are monitoring the situation”—exposes the hollowness of these claims. WhatsApp gossipers may celebrate this as an act of “bravery,” but what kind of bravery is it to intimidate a neighbour that is neither large in size nor strong in military power?

Search This Blog