DeMonetisation – A Tughlaqi Firman


An ill conceived, poorly targeted and badly planned move that disrupts lives of millions of poor needlessly, that was most likely not carried out for any sound economic reasons, but political gains.

On 8th November 2016, Prime Minister Narendra Modi made an address to the nation on TV, bragged about his achievements a little bit, and then dropped a bombshell – he announced demonetisation of ₹ 500 & ₹ 1000 notes with effect from midnight. [1] Predictably, this was immediately hailed as a great step – Modi’s “Surgical Strike” on Black Money – by his supporters, especially the pro-government cheerleaders of the Main Stream Media (which is the only Media in India). Ever since the much milked “Surgical Strikes”, this term is so over-used by the BJP supporters that one wonders if the next fogging operations by your municipality might be dubbed “Modi’s Surgical Strike on Mosquitoes”.

Fact Check – The numbers

No one knows for sure how much total Black Money Indians actually have, as by its very nature, this is the unaccounted part of the economy.

Rough estimates of various figures, to give you the picture.

Rough estimates of various figures
In Rupees In USD
India's Annual GDP 100.0 Lakh Cr 1,500 Bn
India's Union Budget 20.0 Lakh Cr 293 Bn
Corporate Exemptions in Union Budget 5.5 Lakh Cr 80 Bn
Money in Circulation  16.5 Lakh Cr 250 Bn
Schnieder's estimate of Parallel economy (20%) 20.0 Lakh Cr 300 Bn
Estimated flow of Black Money out of India 7.0 Lakh Cr 100 Bn
All India Stamp duty collections on property sales 1.0 Lakh Cr 15 Bn
Rough estimate of Black money used in property sales 2.0 Lakh Cr 30 Bn
Legal gold imports (~900 Tonnes) 2.4 Lakh Cr 36 Bn
Rough estimate of Black money used buying gold 0.8 Lakh Cr 12 Bn
Total individual wealth in India 304.0 Lakh Cr 4,500 Bn
Individual wealth in physical assets 132.0 Lakh Cr 1,980 Bn
-Physical assets (Gold) 66.0 Lakh Cr 990 Bn
-Physical assets (Property) 56.0 Lakh Cr 800 Bn
Individual wealth in financial assets 172.0 Lakh Cr 2,520 Bn
-Financial assets(Cash) 16.0 Lakh Cr 250 Bn

Let’s go with PM Modi’s claim, that if India gets all the black money stashed abroad, every Indian may get ₹ 15 Lakh (remember the pre-election speech, that the BJP president himself said was a Jumla?). So Black Money stashed abroad is ₹ 15 Lakh x 126 Cr Indians = ₹ 1890 Lakh Cr. Too much eh? Let’s assume PM said every family (say, 5 persons per family), not every Indian, may get ₹ 15 Lakh – if Black Money is brought back to India. So then we arrive at ₹ 378 Lakh Cr (₹ 1890 Lakh Cr / 5 persons per family), which we’ll assume to be the amount of Black Money stashed abroad.

This is also close to an estimate by co-founder of one of the largest consumer FMCG company, eminent expert Baba Ramdev, who had arrived at a figure of ₹ 400 Lakh Cr black money stashed abroad.

Now PM has banned currency notes of ₹ 500 & ₹ 1000 – allegedly, in a bid to curb Black Money. But total value (Black + White) of ALL banned currency notes of ₹ 500 & ₹ 1000 is just ₹14.18 Lakh Cr, which is just 3.75% of 378 Lakh Cr Black Money stashed abroad. Data from past Income Tax raids in India show that cash has been just a tiny 6% of all black money seizures! Even if 20% of currency notes of ₹ 500 & ₹ 1000 is black money, it’s just 0.675% of Black Money stashed Abroad. Mere ₹ 255,000 Cr. [2] Now, compare ₹ 378 Lakh Cr with ₹ 2.55 Lakh Cr. Behold the DeMonetisation Drama!

The amount affected by Modi’s Ban is just 0.675% of Black Money Stashed abroad.

In other words, Black Money stashed abroad is about “150 times” more than Black Money in India targeted by Modi via DeMonetisation Drama.


Actually, Modi himself said that major chunk of Black Money is not in India, but stashed abroad. His precise words were:

So PM has forced 99% Indians to temporary poverty & limitless hassles for just 0.675% of total Black Money (mere ₹ 255,000 Cr), while 1% who possess more than 99% Black Money are free to enjoy their life? Cruel, eh? 99% ordinary indians know that those 1% – who actually own Black Money, won’t have to stand in long queues. Ever.

If Modi wanted, he could have recovered significantly more than what might come out of this drive just by asking his friend Adani to pay his debts to Government Banks. But instead of asking “1 person” Adani to pay his dues, Modi has forced “Entire Indian Population” to stand in queue to get their currency notes exchanged. Think! 1 Adani versus 126 Cr Indians. Most hilarious part of DeMonetisation is, as we’ll see later, Indian Government or People aren’t going to get anything through this drama! Except troubles and useless expenses, that is.

As per Credit Suisse Report last year, top 10 corporates owe India about 7 lakh Cr (more than 3 times the 2.55 Lakh Cr Black Money Modi targeted via DeMonetisation Drama). Adani Group had gross debt of ₹96,031 crore, Essar Group ₹1 lakh crore, GMR Group ₹47,976 crore, GVK Group ₹33,933 crore, Jaypee Group ₹75,163 crore, JSW Group ₹58,171 crore, Lanco Group ₹47,102 crore, Reliance Group ₹1.25 lakh crore, Vedanta Group ₹1.03 lakh crore and Videocon Group ₹45,405 crore. Modi could have just asked these 10 people and India would have been better off without this DeMonetisation Drama. [3]
Further, if the aim was to curb black money, why re-introduce ₹ 500 & ₹ 1000 notes, and even add a new ₹ 2000 note? Just do away with the large denomination currency, just as Morarji Desai did in 1978. That’s what opposition is asking. That’s what every common man is asking. But there’s no answer. After all, this is just a Drama.

Anyways, Let’s discuss some blunt questions.

Reality Check – The Questions

Will DeMonetisation of ₹ 500 & ₹ 1000 currency notes result in reduction of Black Money?


The very big fish are of course unaffected, they have their funds laundered abroad (Swiss Banks, PanamaGate, rings a bell?), and re-invested via Mauritius based inflows, that are even trumpeted as FDI by our same leaders! The rich and powerful in India, who somehow had black money kept largely in cash, will still find ways to cheat the system via back dated billing, or even deposits via some Driver’s Jan Dhan account.

Black Money Hoarders are already getting their currency notes of ₹ 500 & ₹ 1000 exchanged at 15-20% commission. It’s just that original owner has now 80% (in ₹ 100 notes, but still Black) and agent earned 20%. Will the commission agent pay income tax? So net Black Money remains the same. Some are purchasing Gold, whose price has jumped up from nearly 30,000/10 gm to nearly double, but same principle applies. Black Money hasn’t reduced. Black Money owners, however, have increased. Commission agents are new Black Money owners. Sure, the original owner’s Black Money got reduced to 80%, but he’ll compensate by doing whatever he did to generate the Black Money more aggressively. Only honest people will suffer.

Black Money will not be reduced by DeMonetisation Drama. Only Black Money Holders will increase.

So what did Indian Government or People of India get by Modi’s DeMonetisation?

Nothing, actually.

If the Black Money hoarder voluntarily discloses his own Black Money and pays up 30% tax + 200% penalty on tax, government will get tax revenue. Will anyone pay 30% + 60% = 90% to effectively get mere 10% white money, when he can retain 80% black money by just paying 20% or investing in Gold purchased in black market? Nope. He’s a Black Money Holding Crook in the first place, remember? So government isn’t getting anything, people are getting hassled & tortured. Some poor people have already died as a direct consequence of DeMonetisation Drama.

Government or People of India are not going to get anything at all from DeMonetisation Drama.

Will India’s economy get anything from Modi’s DeMonetisation?

Nope. Of course, those with white money will be forced to deposit their currency notes of 500₹ & 1000₹ in Banks (private or public) temporarily, but that isn’t going to change fortunes of Banks.The net deposits of all banks is around 109 Lakh Crore, as you can see in a chart below. It’s just 14 Lakh Cr between all Public & Private sector banks together. Even if every single note is deposited in banks for a month or two (unlike what people are doing, changing 500, 1000 notes into 100), which is not going to help Banks.[4]

On the contrary, ALL the retail businesses will suffer at least for a week from no to minimum business. That’s 2% of India’s GDP (business stopped for 1 week out of 52 weeks of a year). In fact, based on India’s PPP per capita income (₹ 122 per hour, converted from US$ 5,350 per year, 8 hours working) if every Indian spends on an average just 1 hour in queue to get his currency exchanged, it’s ₹ 122 x 126 Cr = ₹ 15,000+ Cr loss to People of India.[5] [4] Within a week of the move, Sensex nearly 6 Lakh Crores of wealth had been wiped off the Bombay Stock Exchange.

Besides, if this was aimed at improving Bank’s position, why not force the defaulters, Mr Adani and others to return their dues first?

Discarding old notes and Printing new ones has already cost India ₹ 12,000 Cr. And it seems it was all for nothing, really.[6]

Indian People, Government & Economy will be a Net Loser in DeMoentisation Drama.

Is there any advantage of Modi’s DeMonetisation?

Actually, there is but one. This Ban will eliminate Fake Currency of old design. And of course an opportunity to inject more fake currency in Indian Economy, when People don’t even know how to authenticate real new currency. How hard would it be for Pakistan-China to print new fake ₹ 2000 notes? Already, the reports suggest that RBI did not get sufficient time to implement any additional security features in the new series of notes. So, they are as easy to counterfeit as the old ones! New Black Economy will thrive with ₹ 2000 notes![7]

But, If the aim was to fight the counterfeit currency, there was no need to ban currency notes of ₹ 500 & ₹ 1000. RBI has successfully eliminated the counterfeit currency just a few years back by phasing out old notes. The same BJP, then in opposition, had raised issues for convenience for poor people, even though it was a far more orderly implementation.

After the much hyped surgical strike, terror attacks on borders have increased and Banning currency notes of ₹ 500 & ₹ 1000 haven’t slowed them. And then, of course, there is terror-funding, which will be even better with ₹ 2000. Terror-sponsors don’t really have any dearth of Money, do they?

Also, this scale of the problem of fake currency is not as high as some scare mongering would suggest. A Study by Indian Statistical Institute showed that about 250 out of every 10 Lakh notes in circulation are fake, that is merely 0.025%. [8]

Any reduction in money supply is deflationary, so yes, do expect some further trumpeting of reduction in some prices, especially luxury goods, for a short term. It will only become clear after the exercise is over, how much will the net money supply go down by – RBI can adjust its balance sheet at a later date, or as is more likely, will actually print more money to lend to government. Remember that just because a note ceases to be a legal tender does not extinguish RBI’s liability to the bearer immediately, so the balance sheet impact of wiping off the liabilities, and any special dividend (or Seigniorage, to be precise) will not arise in the manner many cheerleaders have been claiming. With the numerous loopholes that are bound to be exploited by the resourceful people with black money, the amount of notes deposited/exchanged may not be as high as these cheerleaders are expecting. [9][10]

खाया पिया कुछ नहीं, गिलास तोडा बारह आना।

But I heard government has already planned for all loopholes?

You have no doubt seen some stories about how IT department is raiding XYZ, followed by a JAI HIND on WhatsApp by now.

Yet, Modi bhakts have no answer to the simple question, “Was there a need to do demonetisation in order to conduct such raids?”

Modi supporters would like to tell us how various enforcement agencies of the government have already thought of all the loopholes, how everybody’s PAN number and ID will help the government track any wrongdoing.

However, I learnt first-hand from a friend who works in a public sector bank, that since they were totally unprepared for this, they are merely noting down the ID/name/amount details manually in a register. So all the data is not even necessarily being recorded electronically on a computer. Now imagine, if 50 Crore people were to turn up at the banks every day for next 40 days and convert high denomination notes, there would be 2,000 crore entries recorded in all sorts of formats. Even if it takes 15 minutes for a tax official to examine such a record, and enter it into some system, it would require 62.5 crore person days of working 8 hours continuously. IT department will have to employ 25 Lakh people to complete this within a year!

A lot of such explanations also assume that all the tax officials have suddenly turned honest, and the whole system will now work.

Given the scale of data suddenly faced by our enforcement agencies, and their past, I have doubts that they will merely chose people to harass, and actually even extract more bribes in the process. Had all our officials been so honest, and all the checks in the system (PAN number etc.) really worked, would we even have such a huge problem with black money in the first place?

Arun Jaitley has already announced that it will take 2-3 weeks just to make the existing ATM machines compatible with ₹ 2000 notes. If government had planned this DeMonetisation as a real exercise – as opposed to the drama it is today – ATM machines would already be compatible with ₹ 2000 notes.

Banning ₹ 500 & ₹ 1000 notes effectively makes 86% currency (12 Lakh Cr by value) from Economy. Assuming 6% of it is Black Money, has government already printed currency worth 94% of 12 Lack Cr to replace the banned ₹ 500 & ₹ 1000 notes?

Government was neither prepared nor serious for DeMonetisation. This is just a Drama.

But I heard Modiji has designed this special Nano chip enabled notes?

You may have seen WhatsApp messages, and ZeeNews anchor of dubious reputation, tell you how the new notes are embedded with a battery-less Nano NGC Chip, that can transmit its position to Satellites, even from inside a vault, or a depth of 120m.

This is a perfect example of the level of stupidity that is being propagated with a straight face. GPS technology works by a receiver getting time signals from at least three GPS satellites of known position. If you turn GPS on in your smartphone, it will drain your battery pretty quickly, just receiving these signals. If someone has invented a battery-less device that can transmit a signal strong enough to a satellite 36,000 kilometers away, he/she should not be at RBI or PMO, he/she should be receiving a Nobel Prize in Physics.

Why did Modi do DeMonetisation Drama?

If Modi was indeed serious about curbing the parallel economy, he would have simply removed the higher denomination notes. If he was serious about bringing black money, he would have attacked the overseas black money, like every child in India knows. We already discussed above that domestic cash is a very tiny fraction of alleged overseas deposits. So why did Modi take this decision?[11]

The most likely explanation is that this is related to upcoming elections in key states next year. In Punjab, SAD-BJP coalition has been written off by most now. In UP, Dalit anger against BJP, combined with emergence of BSP in what might now be a two-horse race, will most likely result in all anti-BJP votes consolidating behind BSP, thus giving BJP a huge setback ahead of 2019 Lok Sabha elections. Even at its home in Gujarat, BJP appears to be on shaky ground. Key people of Goa RSS are in open revolt against the dictatorship of Amit Shah, and continued meddling of defence minister Parrikar in Goa’s local politics.

In other words, the picture is bleak for Modi-BJP.

Elections in India act as a major sink for black money. Despite Election Commission limits of 70L per constituency, It is estimated that BJP spent several thousands of crores during 2014 Lok Sabha elections. All parties with non-transparent funding do the same – they show white expenses within the limits to EC, spend many times more in cash to supporters, volunteers and so on.[12]

While we are being asked to believe that none of our Netas, their cronies, & the corrupt knew of DeMonetisation, Reports are emerging that show otherwise. For instance the West Bengal BJP deposited Rs 1 Crore in cash on 8th November, the very same day Mr Modi made the announcement. BJP bought many plots of land recently, again, just before this announcement.


Also, an usual rise in deposits, of ₹ 5 Lakh Crores was noticed in many Indian banks just prior to this announcement.


Indian Finance Minister Mr Arun Jaitley responded to this by saying this was due to the arrears paid for 7th Pay commission. What he did not tell us was, that these arrears payments only amounted to ₹ 34,600 Crores, just 7% of the increase.[13]

So, this could just be an attempt to curb the political opponent’s cash while having taken care of their own. Even Financial Times of London, one of the most respected Business paper globally, whose opinion I would value as a more neutral outside voice, has asked if there was a political motive.[14][15]

“Some suggested the move was politically motivated, intended to bolster Mr Modi’s image as a strong, decisive leader and deprive his rivals of war chests ahead of state-level elections early next year.”

“… it’s not as if growth is bursting at the seams. The timing suggests it could be more than just economics.”

Why Now?

The Rabi crops sowing starts soon after Diwali in India. The period is also the “peak marriage season” in large parts of India. Mr Modi couldn’t possibly have chosen a worse time for this hugely disruptive move.

Was it just callousness due to hubris, or is there more to this rushed decision?

Modi needed to take this step any time before the election campaign heats up. This government’s only job seems to be, to make headlines and to mislead people to divert attention from REAL issues exposing Modi-BJP’s Lies.

A week earlier, Modi-BJP were exposed on Suicide of an Army Veteran on OROP (compounded by Modi-Police’s atrocities on his family), Reduction of Army Disability Pension, constant militant attacks and deaths of our soldiers at border, Najeeb’s disappearance and Modi-Police’s atrocities on Najeeb’s mother, Fake Encounters, NDTV Ban and roll-back, etc. It was absolutely necessary to divert attention and garner some headlines in a way that keeps everyone busy and becomes talk of the town. Was this related to Mr Modi and his cabinet discovering that the details of the bribing case, with entries under “Gujarat CM”, that had been buried by his IT department, had been leaked to the activists? Overall, given the particularly unsuitable timing, and a rushed decision without adequete preperation, it does appear to be a political move for eiher of these reasons.[16][17]

Very fact that BJP opposed DeMonetisation in 2014 via a press-conference and has done it now out of the blue is enough to prove that this is just propaganda to fool people of India.

What will be the net result of Modi’s DeMonetisation Drama?

It has already started to Back-Fire on Modi-BJP. Many Bhakts have announced that they’ll never vote for Modi. Ever. People have went their angst against this DeMonetisation on videos, and every single video has become viral. Common Man, feeling direct impact on life for Modi’s hunger for Publicity and this underhand tricks, has become more vocal. BJP has no defence, no statistics, no management, nothing actually, to defend this blunder – except abusing opposition. But, People now want Modi to act, not cry.[18]

Icing on the cake is, Modi has flown away Japan, alienating Indians in their queues in front of Banks & ATMs.

If someone risks his/her life by asking through RTI how much Black Money did Modi recover via DeMonetisation, the figures will be close to 0%.

Dirtiest Emotional Blackmailing.

The unmitigated disaster that he unleashed, has forced Mr Modi into resorting to emotional blackmail worthy of fragile men and charlatans. “My life is in danger. They can burn me alive…”.

His Bhakts ask, Soldiers are protecting our borders standing 24 x 7, can’t you spend 1 hour in queue for country? These same Bhakts abuse you if you ask why Modi back-stabbed Army Veterans by not giving the original OROP, or why did Modi reduce disability pension of Armed Forces by half. Such is their duplicity.

Anyways, as we have already discussed above, Country is in Net Loss by this DeMonetisation Drama. People are in Net Loss. Even soldiers’ families are standing in queue, just because Modi decided to ban currency notes of ₹ 500 & ₹ 1000 just to fool the nation into believing that he’s doing something on Black Money. How sick is that! Not a single Bhakt nor Modi or government has given ANY projections on how much Black Money will be recovered by this Mindless Banning.

Can’t PM ask his buddies to pay ₹ 7 Lakh Cr they owe to India?

Ugly Propaganda

Amit Shah & Arun Jaitley (along with their Bhakt Brigade and Cheerleader Media) have been crying their ars off, asking why opposition is against DeMonetisation? I wonder, why are they asking questions instead of acting on their insinuation? Does country pay PM Modi to wear expensive frocks and dance in Nawaz Sharif’s parties in Pakistan? Ask PM, “why does political parties still have Black Money”? Why is chaukidar sleeping, pretending to be doing Yoga? Force Political Parties to stand in queues, not common people. Mr Amit Shah, who’s ruling India? If opposition has Black Money, Arrest them and Recover the Black Money. Is Modi waiting for Trump’s permission?

One would wonder, however, when it’s so easy to get ₹ 100 notes by paying just 20% commission or through Gold route, why anyone with Black Money would even care to oppose this decision – except if opposing DeMonetisation is “Politically Beneficial”? In 2014, BJP opposed DeMonetization calling it anti-poor. Was it worried about it’s own Black Money, Mr Tadipar? What changed in 2 years? Opposition is opposing because it sees Modi’s Drama, and they want to let people know that they’re raising people’s voice. Money can’t win elections. Remember Delhi 67-3. BJP had everything, except votes. Actually, it’s funny when BJP’s only argument against opposition is accusing them of having Black Money, it not only proves BJP’s ineptness, it also exposes Modi’s incompetence in recovering Black Money – at least from the Opposition.

Jaitley said, “Honest People are happy with DeMonetisation”. Amitabh Bacchan, Ajay Devgan (both named in PanamaGate), Subhash Chandra (Owner of Zee), Adani, Ambani, Badals of Punjab and even Sharad Pawar have welcomed the DeMonetisation, while social media is ablaze with angry Indians cursing Modi and DeMonetisation Drama. So who among these are honest & who are Black Money Hoarders?


Imagine a hunter who tackles the task of catching the crocodiles in a pond by draining all the water out, while the crocodiles actually survive this, and are only mildly inconvenienced, all the small fish die in the process.

That is exactly what happened to the large number of poor people of India.

India has been the fastest growing inequality in the world in recent times. A report published by Credit Suisse showed that almost half of India’s total wealth was in the hands of the richest 1% citizens, while the top 10% controlled about 74% of it. The poorest 30%, meanwhile, had just 1.4% of the total wealth. [19]

The real big fish hoarding the vast amount of black money are probably sipping champagne in some bar in Cayman Islands, while 99% of Indians were effectively criminalised, and had to endure long queues to just get their own hard earned money back. That is, when you have a branch of a Bank near you – there are places in the hills and remote parts of India where the nearest branch of a bank can be very far from you. Out of 2.2 lakh ATM’s just 2500 are in rural India, where 70% India resides, only 1.2 million of 14 million merchants have a point of sale device. [20]

This was hardly a surgical strike on black money, it was a surgical strike on the poor people of India.



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Why govt’s demonetisation move may fail to win the war against black money. 2016. November 12. [Source]
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10 Reasons Why BJP’s Demonetization Move Is An Unmitigated — And Politically Motivated — Disaster. 2016. Huffington Post India. Accessed November 15.
Why PM Modiâs move will lead to disruption than economic benefit. 2016. Times Of India . November 9. [Source]
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Explaining India’s huge currency problem where 250 out of every 10 lakh notes are fake. 2016. The Indian Express. June 8. [Source]
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India struggles to digest withdrawal of high-value banknotes.,. [Source]
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Jawaid, Rifat. 2016. Revealed! Links between PM Modi’s demonetisation and Sahara’s bribery diary. Janta Ka Reporter. November 17. [Source]
Chaturvedi, Swati. 2016. Why Demonetisation & The Following Chaos Could Lead To Narendra Modi’s Downfall. Accessed November 15. [Source]
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