Understanding Demonetization in India

CHAPTER 14

The Ongoing Debate and Political Economy

Demonetization was a decision with few parallels in India’s economic history. It was both an economic and a political necessity. The government’s aspirations for India are important. It can be seen as more than an economic policy, rather as a political tool. Modi has staked his position as a leader capable of making bold decisions. The unprecedented boldness of the decision itself seems, at least in urban and semi-urban India, to have played in his favor. It seems the government has successfully portrayed support for demonetization as a civic and patriotic duty, using paternalistic messaging and repeated assurances that the end justifies the means (Beyes and Bhattacharya 2017). It has reinvigorated ...