New Delhi [India]: Senior Congress leader and party General Secretary in-charge of Communications, Jairam Ramesh, on Friday termed the 2016 demonetisation initiative as the “first major blow” to India’s economy, asserting that the country has “not fully recovered from its impact to this day.”
In a strongly worded post on social media platform X (formerly Twitter), Ramesh criticised Prime Minister Narendra Modi’s demonetisation policy, calling it a failed experiment that disrupted the economy and delivered negligible long-term benefits.
“The demonetisation announcement made with much fanfare by the Prime Minister on the night of November 8, 2016, was the first major blow to our economy – and the economy has not fully recovered from this shock till date,” Ramesh wrote.
Rs 2000 Note Withdrawal: A Futile Cycle?
Ramesh pointed to the Reserve Bank of India’s (RBI) recent data, which states that 98.24% of the ₹2000 notes—introduced after the 2016 move—have now been returned to the RBI, following their withdrawal from circulation in September 2023.
“₹2000 notes were introduced in November 2016, and their sudden demonetisation in 2023 only adds to the absurdity. The return of over 98% of these notes proves how futile this entire experiment was,” he remarked.
Fake Currency Still a Challenge
Refuting one of the key justifications cited for demonetisation—eliminating fake currency—Ramesh cited RBI’s Annual Report 2024–25, which reportedly shows a 37% rise in fake ₹500 notes during 2023.
“If ending fake currency was a goal, then how do you explain a 37% increase in fake ₹500 notes?” he asked, linking to a media article referencing the RBI report.
Background: The 2016 Move
On November 8, 2016, the Indian government invalidated the legal tender status of ₹500 and ₹1000 notes, which constituted 86% of the currency in circulation at the time. The move was announced as an effort to curb black money, counterfeit currency, and terror financing.
A press release issued by the RBI at the time read:
“The Government of India, vide Notification no. 2652 dated November 8, 2016, has withdrawn the legal tender status of ₹500 and ₹1000 denominations of banknotes of the Mahatma Gandhi Series.”
Despite widespread disruption to small businesses, daily wage earners, and the informal economy, government officials have consistently defended the policy as necessary for long-term reform.