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Politics
Modi's 2016 Demonetisation: Congress Calls It Economic Disaster
✍️ The Hindu
🗓 08 Nov 2026, 04:44 PM
👁 1
On November 8, 2016, Prime Minister Narendra Modi announced the demonetisation of ₹500 and ₹1,000 notes, a move that Congress has since denounced as a severe blow to the economy.
Prime Minister Narendra Modi addressed the nation on November 8, 2016, unveiling a surprise policy to invalidate the high‑denomination ₹500 and ₹1,000 banknotes. The decision, presented as a fight against counterfeit currency and black money, required citizens to exchange or deposit the notes within a limited timeframe.
The opposition Congress party immediately criticised the move, labeling it a "notebandi" that has crippled the country's economic engine. Party leaders argued that the abrupt withdrawal of cash disrupted small businesses, daily wage earners and the informal sector, leading to a sharp contraction in consumption.
Economists cited a steep decline in GDP growth in the quarters following the announcement, attributing the slowdown to reduced liquidity and a surge in cash‑shortage related disruptions. While the government claimed long‑term benefits, the immediate fallout sparked nationwide protests and a heated political debate.
The episode continues to shape political discourse, with Congress repeatedly invoking the demonetisation as a cautionary example of policy overreach, while the ruling party defends it as a necessary step toward a cleaner financial system.
The opposition Congress party immediately criticised the move, labeling it a "notebandi" that has crippled the country's economic engine. Party leaders argued that the abrupt withdrawal of cash disrupted small businesses, daily wage earners and the informal sector, leading to a sharp contraction in consumption.
Economists cited a steep decline in GDP growth in the quarters following the announcement, attributing the slowdown to reduced liquidity and a surge in cash‑shortage related disruptions. While the government claimed long‑term benefits, the immediate fallout sparked nationwide protests and a heated political debate.
The episode continues to shape political discourse, with Congress repeatedly invoking the demonetisation as a cautionary example of policy overreach, while the ruling party defends it as a necessary step toward a cleaner financial system.