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Dethroning “King Cash” – daily life post demonetization

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While it is true I spent much of November and December in Indonesia, I’m home in India now and discovering the new day-to-day reality of life post demonetization.

For those not familiar, on November 8, 2016 the Prime Minister of India with a swipe of his pen made the Rs 500 and Rs 1,000 notes no longer legal tender – effectively taking 86% of the currency out of circulation.

The rules of how to exchange or deposit any cash kept changing and, more challenging, the new Rs 2,000 then also Rs 500 notes were a different size so ATMs didn’t immediately work. Then when re-calibrated, apps popped up informing where you could get cash – finding an ATM (or bank branch) with cash became a more elusive race than catching Pokemon Go!

When I landed at Mumbai’s international airport, I made a bee-line to ATMs as the airport queues were minimal… to then try to explain to confused foreigners that the reason they couldn’t take out money was they requested too much. Insert aghast expressions when told could only take out the equivalent of $30!?


India has remained a country with high volume largely cash transactions – 98% of transactions representing about 68% of value transacted were in cash. To say that “cash was king” was an understatement.

Yet today, cash has been partly dethroned. The economic disruption is not to be under-estimated. Wall Street Journal called the arbitrary move “India’s bizarre war on cash” and Forbes called it “sickening and immoral.”

“What India has done is commit a massive theft of people’s property without even the pretence of due process – a shocking move for a democratically elected government.” Forbes

Small signs – last year the traffic on New Years was so bad we elected to join a small house party near our home as no way were we going to spend 3-4 hours stuck in our car rather than celebrating with friends.

This year? No traffic. Nada. No one had / was spending any money!

It was assumed the graft corruption cash would not make it back to banks – a whopping 94% was returned. There have been printing errors, the poor were hurt most, No surprise, investment is leaving the country

The “rules” keep changing – the latest being that only Non-Resident Indian citizens or those citizens out of the country from Nov 8 to Dec 31, 2016 are eligible to deposit directly with the Reserve Bank of India (RBI) until March 31 to a limit of only Rs 25,000… despite the PMs initial promise?! Change mind, much?

Speculation runs rampant on what really lies behind the decision.

However our every day reality has shifted gears. The inconvenience of demonetization has created some new conveniences.

Places that earlier were only set-up for cash, now have digital and card alternatives. Mobile wallet and online services got a boost. My partner’s driver now proudly flashes his ‘card’ to swipe for airport parking and other such things where the option is available.

And yet everyone is spending less… often much less.

I’m no expert. But surely that can’t be a good thing.

Today there is generally sufficient cash in banks and ATMs for everyday transactions and rules on withdrawal limits are relaxing. The pendulum is swinging back into the direction of petty cash for services like pressing clothes, small deliveries, rickshaws and more.

We a long way from recovering from the forced jolt of Modi’s demonetization.

Cash may no longer be “King” but digital is not yet “Queen.”



  1. How interesting… I heard about this, but am woefully under-informed on the details. Would be good to hear more about this affects daily life. How’s the Furry Princess, by the way?

  2. It’s a reality of demonetisation in India. No one knows the step of cashless economy is really working or not…. Even prime minister don’t know… A harsh reality.

  3. This was also in the news here in Germany. Especially how the poor are suffering because of that as many do not even have bank accounts and handled everything with cash…

    • It is very true. Not so easy getting a bank account here as you need to have ‘address proof’ which needs to be your ‘permanent address’ or a proper lease which isn’t available for many. Quite challenging.

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