Volume-7; Issue-1; Jan.-June-2017; http://www.ijfar.com/ pp.

81-93; ISSN: 2350-0115

Demonetisation: Was there an alternative?

Prof. Neeraj R. Hatekar1, Masudul Hasan Adil2
1
Professor of Econometrics, Department of Economics (Autonomous),
University of Mumbai- 400098.
2
Corresponding author, Research Student, Department of Economics (Autonomous),
University of Mumbai- 400098.
Abstract

India was taking significant steps in promoting factors that lead to greater
digitisation for the last decade or so but then demonetisation could hassle the process towards full
digitisation. This conclusion has been drawn with the help of simple regression model by using the
Global Financial Development Database of the World Bank for November 2016. Further, there are
also significant chances, of those who have become digitise recently, to non digitisation. The
important issues in the long run are transactions cost associated with digital payment, the state of
infrastructure and the taxation regime.

Keyword: Digitisation, Demonetisation, Regression, Digital payment, Taxation.

JEL Code: E65, C21, G20, G28, H20.

1. Introduction

The digital India campaign is carried out for several years by the Government of India. To make this
campaign successful, India was taking significant steps in promoting factors that lead to greater
digitisation for the last decades. On 8th of November 2016, the recent demonetisation and currency
swapping of high- denomination of 1000 and 500 rupee notes respectively, which constituted more
than 85% of currency outstanding in value, are considered as one of the important steps towards
digitisation of the economy. Number of rationale have been given behind demonetisation move such
as- stamp out black money, eradication of counterfeit currency, fight tax evasion, restrain the terrorist
financing activities and cashless economy (i.e. Digital India) .1 However, this study will be focussing
upon only the cashless economy objective behind demonetisation. Before going into detailed study of
this decision one should think of what the demonetisation is. But this study will be focussing upon
whether demonetisation is an alternative in digital India perspective.

The act of stripping a currency unit of its legal tender is considered as Demonetisation. In other
words, withdrawal of any denomination of currency from circulation once for all the time is treated as
 Volume-7; Issue-1; Jan.-June-2017; http://www.ijfar.com/ pp. 81-93; ISSN: 2350-0115

demonetisation. 2 As mentioned by Chidambaram P. (2016) demonetisation means the currency is

killed once and for all. According to him the recent demonetisation is not a demonetisation rather this
is simply an exchange of old notes for new. It is not the demonetisation of the currency rather
demonising cash. However, question arises, whether demonetisation was the only alternative towards
digitisation. Then answer depends upon the scope as well as the cost and benefit of demonetisation
measure.

Demonetisation is considered as a remedial measure whenever there is hyperinflation or instability in

the currency (Chidambaram, 2016). It is necessary whenever there is a change of national currency or
some form of financial crisis rears its ugly head. Then the old unit of currency must be replaced with
the new one. Since long back, many of the countries demonetised their currencies due to
hyperinflation and currency instability such as- Zimbabwe, Libya, North Korea and Venezuela etc. As
far as India is concerned, it is not the first time when this step is taken. Demonetisation has been done
twice in Indias history in the past. In January 1946, the very first demonetisation was made when Rs.
1,000 and Rs. 10,000 banknotes were taken out of circulation. Later on, in 1954, character of Rs.
1,000, Rs. 5,000 and Rs10, 000 banknotes were introduced. Further, the second time in January 19783,
again all three high denominations were demonetised (Gopakumar et.al, 2017). The Rs. 100 note
remained the highest denomination in circulation for almost a decade, after the 1978 demonetisation.
Apparently with a view to meeting higher transaction needs due to inflation, Reserve bank of India
(RBI) issued Rs. 500 banknotes in October 1987. Further, in November 2000, the Rs. 1,000 note was
reintroduced (Rajakumar and Shetty, 2016). Lastly, on November 8th, 2016 once again government of
India declared that use of all Rs. 500 and Rs. 1,000 banknotes of the Mahatma Gandhi Series would
be invalid and announced the issuance of new Rs. 500 and Rs. 2,000 banknotes of the Mahatma
Gandhi New Series in exchange for the old banknotes.

After all, it became an open secret that it is not the first time when demonetisation has happened on 8th
November, 2016. In 1946 and 1978 as well this incidence took place. If demonetisation were the
major factor behind cashless economy then India would have done digitisation earlier in the past. But
the quantum of digitisation is not increase as much as it should have been. Also, other objectives
which have given behind demonetisation such as curbing out black money, nepotism, counterfeit
currency and so on would have been solved earlier. Since, all these reasons are nothing to do with
demonetisation hence move towards demonetisation is useless. As mentioned by Rajakumar and
Shetty (2016), such extreme steps are resorted to only in response to situations of hyperinflation or
some form of financial crisis. Of course no such situation exists now.

Finally, question arises what the demonetisation has done in terms of its cost and benefit. Then
answer depends upon what kind of pain and gain society has got due to demonetisation. Since, it
would be easier to understand the difficulty due to demonetisation if we compare the current
demonetisation with the earlier one. Hence, we mention some of the important differences then and

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now due to demonetisation in terms of cost to the society. It is evident that current situation of
November 8th announcement to demonetise the character of Rs. 500 and Rs. 1000 notes constitute
over 85% of total notes in circulation by value. Consequently, it is widely acknowledged that public at
large suffered a lot. On the other hand, demonetisation in 1978 received less attention of the public
due to having little impact on peoples daily life. It is also important to note over here that high
denomination notes demonetised then, constituted minuscule fractionabout 0.6% of the total
currency in circulation (Rajakumar and Shetty, 2016). Also only a week is given to convert their high
denomination notes into low denomination. Further, high denomination value (Rs. 1000, Rs. 5000 and
Rs. 10000) were hardly available to common people. Hence, cost to the society by that time was also
very low. In spite of that, 1978 demonetisation was total failure.

There was not as much hue and cry as it is right now. Since 8th November, due to maximum cash
withdrawal limit from the bank account a lot of business activities are closed down such as labourer
could not get their wages, farmers could not sown their crop, traders stopped their trading,
transportation activities are affected a lot and last but far away from the least informal sector (for
which economist estimates its current contribution to GDP at anywhere between 25 and 70 percent as
mentioned by Barbara (2016)) has affected very badly. Apart from the above consequences of
demonetisation it has also been reported that the number of persons death toll are 33, as of 18th
November across the country; which is linked to sudden demonetisation move directly or indirectly
(Indian Express, 2016).

In a nut shell, demonetisation as a measure, to put down black money, stamp out counterfeit currency
and tax evasion etc, is extremely wrong. Because, where the cash economy is extremely large
demonetisation is not the answer.

Those who favour the move towards demonetisation are few in number. They are of the view that it is
one of the important factors towards digital India. Before making any comment on this aspect we
should look at the Indias digital infrastructure and policy.

As mentioned by Barbara (2016), it is estimated that somewhere between 32 percent and 46 percent of
adult Indians are having their bank accounts while 80 percent women have no bank account. In terms
of digital infrastructure India is ranked very low, globally. Out of 1.3 billion populations, the access to
internet is in between a quarter to a third. Further, major factor which constitute the digital
infrastructure in India are only 740 million debit cards and 27 million credit cards. Also mentioned by
her that although there are nearly two billion sim cards but only 350 million mobile phone subscribers
and only 150 million smart phones are in India. These shows that still there are many people without
mobile banking connectivity. Particularly in rural areas, cell-phone internet users hardly know to
make digital transactions or they trust on it. Majority of them use cell phone internet for entertainment
purpose. By keeping in mind the above mentioned facts it is true that unbanked people have been

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penalised. Because government adopted the policy that after the November 24th, 2016 newly illegal
notes could be exchanged through bank accounts only.

The present study attempts to find out whether demonetisation was an alternative towards digital
India. Study is divided into five sections. Section 1 has given an introductory remark about digital
India and demonetisation. Section 2 deals with literature based on digital payment and demonetisation
and try to look for the future of virtual banking over physical banking. Section 3 talks about sources
of database and methodology and their variable description. Section 4 represents the empirical work,
and Section 5, sums up the article along with concluding remark.

2. Literature Review

This study will focus on one of the important objective, i.e. Will India move towards digitisation
due to recent demonetisation measure? This section will be highlighting the literature based on
possibility of cashless economy in the world (in general) and India (in particular). One should keep in
mind that demonetisation is considered as one of the important means towards an end i.e., cashless or
virtual economy. Hence, before knowing whether demonetisation will help to achieve that end or not
we should think of, in general, will virtual system of banking will dominate the physical system of
bank. This important question raised by Mishkin F. (2009) in his book such as

Will Clicks Dominate Bricks in the Banking Industry?

Mishkin raised the question in his book, With the advent of virtual banks (clicks) and the
convenience they provide, a key question is whether they will become the primary form in which
banks do their business, eliminating the need for physical bank branches (bricks) as the main
delivery mechanism for banking services.The answer which we get from him is a big no. He is of the
view that Internet banking has been a disappointing. He has given a number of reasons for this such
as Firstly, security issue to depositors saving in new institutions. Secondly, threat to privacy of
customers private information due to online transactions. Thirdly, mindset of customers in dealing
with physical branches. Finally, fear of technical problem with internet banking.

On behalf of the above rationale Mishkin concluded that, the wave of the future thus does not appear
to be pure Internet banks. Instead it looks like clicks and bricks will be the predominant form of
banking, in which online banking is used to complement the services provided by traditional banks.
Nonetheless, the delivery of banking services is undergoing massive changes, with more and more
banking services delivered over the Internet and the number of physical bank branches likely to
decline in the future.

Can India Be Headed Towards Cashless Society

After the above discussion it is evident that the fully virtual banking system is quite impossible in case
of any country. But up to some extent, move towards virtual banking system is possible. As far as

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India is concerned, she is suffering with lack of digital infrastructure which will be hurdle towards
digitisation.

In order to look at the digital infrastructure of India one should look at Cash-GDP ratio data. It is
indeed an open secret that Indias cash to GDP ratio is very high along with other countries. But this
also reflects the Indian economys dependence on cash. As mentioned by Chidambaram P. (2016) the
comparison of cash to GDP proportion of some major economies in the world with India. For
example, first, if we take US economy then it is $21 trillion and 8.6% of that, is cash economy.
Second, take Chinese economy, it is $14trillion and 12.7% is cash. Third, Japanese economy, it is
about $4.5 trillion and it is 11% in cash. Lastly, Indian economy, which is just only $2.25 trillion and
22%, is in cash. Based upon the above mentioned data he concluded that aim of cashless economy at
present would not be only utopian rather foolishly utopian.

After the November 8th, 2016 demonetisation, several studies have been done on its socio economic
impact, policy implication and impact on Indian economy and so on. Some of the important studies
are mentioned as follows

Rajakumar and Shetty (2016) presented a comprehensive analysis on demonetisation. They have
traced out the issuance of currency and its demonetisation over a period of time. Consequently, they
compared the current demonetisation with the one carried out in 1978. They mentioned in 1978
demonetisation, about 53% of the high denomination notes tendered for conversionwere with the
banks and government treasuries and not with the public. While in the recent demonetisation (2016)
just about 5% of the total notes in circulation were with banks and government treasuries. And about
95% of such currencies were with the public. Hence, there are lot of hue and cry this time. Besides,
the motivations behind the action are also quite different. After the detailed comparison between the
past (1978) and present (2016) demonetisation, they concluded that recent demonetisation was
undesirable.

Dasgupta (2016) analysed the possible consequences of the recent demonetisation exercise in India.
Study says even if the governments intensions are laudable, the sudden disappearance of around
86% major chunk of currency notes from the economy has lead to population into a surprise,
henceforth an unprecedented monetary turmoil existed. Further, with aid of elementary
macroeconomic model such as money market equilibrium and goods market equilibrium and their
interaction in IS-LM framework, study showed how the monetary (money market equilibrium) and
non monetary (goods market equilibrium) variables of the economy is negatively affected by the
demonetisation decision. In concluding remark of his study, author made a comment on government
believes demonetisation has been successful due to random shock to the system. In his comment,
author mentioned well- known observation made by Robert Lucas (1977) in his Nobel Lecture:
Unanticipated monetary...contractions can induce depression. Finally he linked the random shock to

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the observation made by Lucas (1997) and then concluded that Indias random demonetisation
exercise therefore may well turn out to be a test case for Lucas prediction. In a nut shell, with the
help of Lucas observation study questioned the merits of economic policies that assume the form of
random shocks to an economic system.

Nag (2016) examined the lost due to demonetisation. He studied the pros and cons of demonetisation
move such as its economic impact, loss of business and GDP due to demonetisation, informal credit
disruption, and liquidity impact on the Banks and so on and so forth. Also he has made comment on
two episodes of demonetisation, in independent India, as an effort to curb the menace of black money.
Author underlined that black money is not a hard cash which are kept by corrupt officials, politicians
and business people. As also mentioned by Patnaik (2016) that black money is not a stash of money
which is kept under the pillow cases or in a trunk rather it is a series of illegal activities that is
produced over a period of time. Further it is a flow concept not the stock concept. Finally, Nag
concluded, elimination of unaccounted and tax evaded money does not guarantee to stop black
money. In turn demonetisation can be considered as a temporary road bump which will not put a cap
either on corruption or the black money generation.

Thus, keeping in mind the above mentioned literature this study will try look at whether
demonetisation is as an alternative for digital India campaign.

3. Database and Research Methodology

For a good empirical analysis availability of a good database is a necessary condition. One should
keep in mind, It is capital mistake to theorize before one has data. Insensibly one begins twist facts to
suit theories; instead of theories to fit facts (as quoted by Sir Arthur Conan Doyle through his famous
character Sherlock Holmes) Adil (2016) quoted Sir Doyles quotation. However, lack of reliable
dataset is one of the major problems in case of developing countries. Present study used the Global
Financial Development Database of the World Bank for June 2016. This is panel dataset for 206
countries across globe. Cross section dataset has been sorted out from this and present study is based
on cross section data for 67 countries.

This dataset contain data on the broad variable such as access, depth, efficiency, and other economic
variable. Each of these variables is represented by different indicators, such as access variable is
represented by debit cards and ATM per 100,000 adults, depth variable by insurance company assets
to GDP, efficiency by bank lending-deposit spread and finally other economic variable is represented
by GDP per capita . Study used the dataset for each of the indicator to represent those broad
variables.

4. Regression Analysis

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At the very outset one should keep in mind, cashless economy objective is given as one of the
justification behind demonetisation. Study tries to find out whether demonetisation was an alternative
for cashless economy. Following this objective, we try to find out that what the true drivers of
cashless economy are. Then accordingly one can conclude whether demonetisation was an alternative.
Consequently, we chose some of the important determinants of cashless economy/electronic payments
and with the help of regression analysis we try to quantify the explanatory power of electronic
payment. Following this fashion, in the end study concludes whether demonetisation was an
alternative.

Now days, regression is the need of the hour in social sciences, in general and in economic, particular.
In economics, regression analysis is a standard statistical tool to verify any economic theory
empirically in case of any country.

Regression analysis is concerned with the study of the dependence of one variable, the dependent
variable, on one or more other variables, the explanatory variables, with a view to estimating and/or
predicting the (population) mean or average value of the former in terms of the known or fixed (in
repeated sampling) values of the latter, (Gujrati,2010).

Broadly speaking there are two types of regression analysis, namely, the Bivariate, or two variables,
regression analysis in which the dependent variable is related to single explanatory variable. Another
regression is, multivariate, or multiple regression analysis in which regressand (dependent variable) is
related to multiple or more than one response variable. It is quite popular because of its much
explanatory power, especially due to its multivariate nature.

This study used log-linear models which is an special case of semilog multivariate regression analysis.
Of which, functional form is as follows

Elec 3 ATMs
ln = + Dbt Crd + + ICA to GDP + BLDS
Elec ,

+ PCI + ui

Or

ATMs
Yi = + Dbt Crd + + ICA to GDP + BLDS
,

+ PCI + ui ............... (1)

Where,

Elec
= ln Elec
. Here, Elec means electronic payments used to make payments (% age 15+). The

percentage of respondents who used electronic payments (payments that one makes or that are made
automatically including wire transfers or payments made online) in the past 12 months to make

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Elec
payments on bills or to buy things using money from their accounts. And ln is simply the
Elec

log of odds ratio in favour of making electronic paymentsthe ratio of the probability that a person
will make an electronic payment to the probability that he/she will not make payment.

Dbt Crd = Debit Card (% age 15+). Percentage of respondents with a debit card. This is taken as an
indicator for access variable.

ATMs/100,000 = Number of automated teller machines (ATMs) per 100,000 adults. Again it
represents to the access variable.

ICA to GDP = Insurance Company Assets to GDP (%). This represents the indicator for depth
variable.

BLDS = Bank lending- deposit spread. This is used an indicator for efficiency variable. It is
difference between lending rate and deposit rate. Lending rate is the rate charged by banks on loans to
the private sector and deposit interest rate is the rate offered by commercial banks on three-month
deposits.

PCI = GDP per capita. It is calculated by dividing the GDP with population. It is considered as an
indicator for other economic variable.

Prima facie all these explanatory variables are thought of better explanation for the regressand
(dependent variable). In order to verify this regression model empirically we estimated this relation.
Also, in order check the predictability of the model various diagnostic tests have been conducted. The
diagnostic tests check for serial correlation, heteroscedasticity, model specification and normality of
the residual term in the model. BreuschGodfrey test is employed for serial correlation. For
heteroscedasticity, which is very common problem in cross section dataset, Studentized Breusch-
Pagan test is conducted. Ramseys RESET (regression specification error test) is conducted for model
specification error. Finally, Jarque-Bera Normality Test is employed to test the normality assumption
of the error term. All the empirical results are discussed in next section.

5. Empirical Analysis

The empirical analysis of multiple linear regression model is presented in Table 1. As evident from
the Table 1, regression estimate shows one of the best fit models. Let us start with the residuals. Most
of the statistical inferences can be drawn easily if the residuals are normally distributed such as
normality assumption enables to derive the probability, or sampling, distributions of parameters and
variance of the error term. Also it helps in statistical inferences. Since the first quartile is almost equal
to third quartile; hence residuals are almost following the normal distribution which helps us to derive
most of the statistical inferences easily.

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Table 1. Multiple Linear Regression Model

Residuals:

Min 1Q Median 3Q Max

-1.71589 -0.59715 0.05522 0.63338 2.23327

Coefficients:

Estimate Std. Error t value Pr(>|t|)

(Intercept) -2.6623 0.1006 -26.466 < 2e-16 ***

Dbt Crd (Access) 0.8485 0.1233 6.88 3.73e-09 ***

ATMs per 100,000 (Access) 0.3683 0.1337 2.754 0.00774 **

ICA to GDP (Depth) 0.2774 0.1308 2.121 0.03796 *

BLDS (Efficiency) -0.2208 0.1065 -2.073 0.04243 *

PCI(Other Economic) 0.2898 0.1326 2.186 0.03266 *

Signif. codes: 0 *** 0.001 ** 0.01 * 0.05 . 0.1 1

Residual standard error : 0.8234 on 61 degrees of freedom

Multiple R-squared: 0.7768, Adjusted R-squared: 0.7585

F-statistic: 42.47 on 5 and 61 DF, p-value: < 2.2e-16

Source: Calculated by authors.

Secondly, it is evident from the significant codes that all coefficients of the explanatory variables are
statistically significant which shows that the explanation of each explanatory variable to the response
variable is quite true. The access variable i.e. debit card has the coefficient 0.8485 which means that a
unit increase in debit cards will lead to increase digital payment by 84.85%; holding all other
explanatory variables constant. Likewise other coefficients can also be interpreted.

Lastly, the goodness of fit of the model i.e. adjusted R2 is 75.85% which is quite desirable. It means
that 75.85% variation in electronic payments is because of included explanatory variables such as
debit cards, ATMs per 100,000 adults, insurance company assets to GDP, bank lending-deposit spread
and per capita income.

Diagnostic tests

The goodness of fit may be one criterion to judge the model although it is not the only criterion. There
are various tests statistics which reveals some important information about the model. Some of the
important tests statistics which are necessary to diagnose the model are discussed in the Tables below.

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Table 2. Diagnostic Tests

Tests Test statistic p-value

Studentized Breusch-Pagan test (Heteroscedasicity) 1.8271 0.8725

Breusch-Godfrey test for serial correlation 2.8961 0.0888

Jarque-Bera Normality Test 0.16679 0.92

RESET (regression specification error test) test 1.8938 0.06774

Source: Calculated by authors.

Note: p-value means probability value.
In diagnostic tests, firstly study employed Studentized Breusch-Pagan test for heteroscedasticity. It is
conducted to check whether error terms are homoscedastic. Heteroscedasticty is an important issue
especially in cross section dataset. Since the probability value (p-value) of this test is 0.8725 which is
higher than 5% level of significance hence, we accept the null hypothesis of no heteroscedasticity.

Secondly, Breusch-Godfrey test for serial correlation is conducted. The p-value in this test is 0.0888
which is higher than 5% level of significance. Consequently we accept the null hypothesis of no serial
correlation in the model.

Thirdly, Jarque-Bera test is performed to check the normality assumption of the error term. Also this
test is conducted on the given data sample to determine whether the data sample are drawn from a
normal population. In this test, since p-value is quite high, i.e. 0.92 which is absolutely higher than
5% level of significance so we accept the null hypothesis of normal distribution of error term.

Finally, Ramseys RESET test has conducted to check the regression specification. Here also p-value
is greater than 5% that is why null hypothesis of no misspecification of model is accepted.

Thus, all the test statistics are representing quite rosy picture which proves that model has not any
kind of fundamental flaw. Since our model suffices the entire diagnostic test this shows that model
can also be used for policy implication.

After passing out all diagnostic tests and getting good adjusted R- squared, it is evident that formation
of true drivers of electronic payment is established. Since all explanatory variables are explaining well
enough to the electronic payment (regressand). Hence one should be focussed upon making stronger
to these electronic payment relations, such asmore number debit cards should increase, number of
ATMs should increase rapidly and so on, rather than demonetisation of the currency.

6. Conclusion

India has started campaign for greater digitisation for last decade or so. Meanwhile government of
India has taken the bold step of demonetisation which was totally bolt from the blue. On 8th of

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November 2016, in one impetuous decision the Prime Minister of India has shattered the faith and
confidence of hundreds of millions of Indians by stripping the character of Rs. 500 and Rs. 1000
denomination currency notes of their legal tender status. The primary goals behind this step were to
get rid the economy of counterfeit currency, hit out at tax evaders, stamp out black money, cashless
economy and restrain the terrorist financing activities. By keeping in mind these goals, it was not sure
to say whether demonetisation was an appropriate measure. Different economists, policymakers and
scholars expressed their views in different fashion. Among all other, some of them are mentioned over
here with their views such as noble laureate and economist Amartya Sen (2016) termed
demonetisation as despotic action, former prime minister and economists Manmohan Singh (2016)
says demonetisation as Making of a mammoth tragedy, noted economist Jagdish Bhagwati (2017)
remarked that Demonetisation alone cant fight graft cases, and so on. Of course this is subtle to
reach at any particular conclusion.

It has been emphasized that demonetisation is an important move towards cashless economy or digital
India. Consequently, among other objectives behind demonetisation, this study only focussed upon
cashless economy. Thus, present study attempted to look for whether demonetisation was an
alternative behind cashless economy.

In order to verify the objective of the study empirically, study used the Global Financial Development
Database of the World Bank for November 2016. By using this dataset, multiple linear regression is
run in cross section countries case for the year 2011. On behalf of this regression analysis study
concludes that the set of explanatory variables which are considered in this regression model explain
the 75.85% of the variation in electronic payment. This represents quite rosy picture for establishing
true indicators of electronic payment. Therefore one should focus on making this relation stronger
rather than demonetising the currency. Demonetisation is a kind of threat to the public which affect to
the mindset in negative direction. Consequently it could hassle the electronic payment system also.

Further, it is important to note that there are also significant chances of those who have become
digitise due to demonetisation compulsion may revert. The important issues in the long run are
transactions cost associated with digital payment, the state of digital infrastructure, security issue of
individuals privacy, mindset of an individual towards digital system and the taxation regime. Here,
one should keep in mind that transformational changes in the mindset of any society are not the matter
of one or two years, rather it takes generation to change. Hence, demonetisation cannot compel to the
people with cash transaction to cashless transactions rather it affect the mindset of the public in
negative direction which may lead towards lack of confidence in the banking system. In this regards,
study would like to quote here Manmohan Singh (2016), Consumer confidence is an important
economic variable in a nations growth prospects. It is now evident that this sudden overnight ban on
currency has dented the confidence of hundreds and millions of Indian consumers, which can have
serious economic ramifications. The scars of an overnight depletion of the honest wealth of a vast

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majority of Indians combined with their ordeal of rationed access to new currency will be too deep to
heal quickly. This can have ripple effects on GDP growth and job creation. It is my humble opinion
that we as a nation should brace ourselves for a tough period over the coming months, needlessly so.

Apart from the above, process of digitisation were going on up to its usual pace prima facie such as
there were clear remarks that the move towards cashlessness with the help of electronic technology,
was being actively prepared throughout 2016 for a market that had been estimated (by Boston
Consulting Group) before November 8th as going to be worth $500 billion ecosystem in India by 2020
(Boston Consulting Group). Nevertheless, with the huge investment from the US and China and
particularly entrepreneurs like Bill Gates, digital transfer technology was advancing rapidly (Barbara,
2017). Hence, there was nothing to do with demonetisation.

In the end, we would like to bind up with the quotation of Barbara Harris White (2017), Besides
being understandably judged drastic and radical the policy has also been condemned as being
coercive, illegal, a theft of property, unconstitutional, despotic, trust-destroying and immoral by
authorities ranging from the eminent Marxist economist Prabhat Patnaik through Nobel economics
laureate Amartya Sen and former PM and economist Manmohan Singh, to Steve Forbes in the
January 2017 issue of the US financial magazine bearing his name. When both left and right draw
such conclusions something is evidently seriously amiss.

Remarks:

1. Cashless economy and the Digital India are used interchangeably. Further, one should note
that cashless economy is treated as means towards the ends i.e. Digital India.
2. Indias recent demonetisation is sectional not the general demonetisation because only part
(1000 and 500) of the currency denomination is demonetised (Vasudevan, 2017).
3. The High Denomination Bank Notes (Demonetisation) Act, 1978.

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