Currency Chaos

The Modi government's surgical strike on black money leaves Indians high and dry. But will this demonetisation wipe out the scourge of illicit wealth?

Two earth-shaking events happened in two large democracies of the world - the USA and India - last month. The nature and magnitude of these events can change the economies of the two countries and, in turn, write a new chapter in the global economy. November 8, 2016 will be marked as a red-letter day by their historians. On this day, the US was counting votes, and India was counting notes.

The US citizens elected Donald Trump as their 45th president. Marking an end of the eight-year Barrack Obama rule, Mr Trump will take charge of the USA next year. Mr Trump, a successful businessman without any political background, is likely to introduce sweeping changes in the world's largest economy and could reshape global economy.

In India, on the same November night, Prime Minister Narendra Modi announced demonetisation of Rs 500 and Rs 1,000 currency notes. This radical decision can have far-reaching economic ramifications. Mr Modi's drastic action - described as his government's second surgical strike is aimed at fulfilling his election promises of removing black money and corruption and also striking at the roots of terrorism, financed by fake currency to a large extent.

The prime minister's action is considered to be a hasty step and rightly so. A surgical strike of this nature cannot happen with an advanced notice. A slightest hint of such a measure would have made the exercise completely ineffective and useless. The drastic measure has created untold hardships and misery for the common man. The worst hit are people in the unorganised sector, like daily wageearners, labourers and domestic helps.