A Study of the Previous Demonetization Instances in India – A Comparative Analysis of 1946, 1978 and 2016

Abstract

Demonetization has been adopted many times, for a variety of reasons in the economic history of the
world. India has also witnessed this policy thrice in the 70 years period between 1946 and 2016. The
primary objective in all the three instances was elimination of black money and corruption from the
society. However, the demonetization drive of 2016 had a wider scope of promoting cashless
transactions and facilitating digitalization of the Indian economy.
The major difference between 1946, 1978 and 2016 demonetization drives was that in the first two
instances the demonetized high denomination currency constituted a very small percentage of the
total currency notes in circulation. At the time of currency ban in November 2016, the high
denomination currency notes formed about 86 percent of the total notes in circulation.

Keywords: Black Money, Corruption, Currency in Circulation, Digitalization