India’s Demonetization Visualized

A simple visualize to understand both the enormity of India’s recent demonetization of its ₹500 and ₹1000 banknotes and the possible smallness of the amount of black money this move is meant to eliminate.

The data represented here is from the RBI’s Annual Report (March 2016), where the total value of the banknotes in circulation at the time was ₹16.415 trillion, 86% (₹14.18 trillion) of this value being in ₹500 and ₹1000 denominations. The black money is represented at a conservative estimate of 6% (₹850 billion).

I’m no economist but looks like a very wide, inconvenient, and disruptive net cast to trap a small amount of black money held in cash. I will have to re-assess once the dust settles on this extreme and surprising move, and when new data is made available. The better outcome of this move could be in how it transforms the average Indian’s daily financial transactions.