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Review Paper | Information Technology | Volume 15 Issue 6, June 2026 | Pages: 194 - 199 | India
Demonetization in India: A Comprehensive Analysis of Causes, Impacts, and the Future of a Cashless Economy - A Research Paper
Abstract: Demonetization is one of the most consequential macroeconomic policy interventions undertaken by the Government of India in recent history. On 8th November 2016, Prime Minister Narendra Modi announced the withdrawal of legal tender status from ?500 and ?1,000 banknotes, which together accounted for approximately 86% of the currency in circulation. While India has previously experienced demonetization in 1946 and 1978, the 2016 episode is distinctive because it occurred during a period of macroeconomic stability and rapid GDP growth, rather than during war, hyperinflation, or political upheaval, which are the typical historical triggers for such drastic monetary action. This paper examines the multifaceted dimensions of demonetization, including its stated objectives such as curbing black money, eliminating counterfeit currency, reducing terror financing, expanding the formal tax base, and accelerating the transition toward a digital economy. Through a critical review of empirical evidence from the Reserve Bank of India, government reports, and peer-reviewed studies, this paper evaluates whether the policy achieved its avowed goals. It also analyses the proposed alternatives, the disadvantages encountered by the informal sector, and the future scope of cashless reforms in India. The findings suggest that although demonetization succeeded in catalysing the digital payments revolution, it largely failed in its primary objective of extinguishing black wealth, since 99.3% of the demonetized notes were eventually returned to the banking system.
Keywords: Demonetization, Black Money, Digital Economy, Cashless India, Monetary Policy, UPI, Financial Inclusion, Reserve Bank of India
How to Cite?: Viaansh Mahajan, Raghu Raja Mehra, "Demonetization in India: A Comprehensive Analysis of Causes, Impacts, and the Future of a Cashless Economy - A Research Paper", Volume 15 Issue 6, June 2026, International Journal of Science and Research (IJSR), Pages: 194-199, https://www.ijsr.net/getabstract.php?paperid=SR26601210908, DOI: https://dx.dx.doi.org/10.21275/SR26601210908