'Notebandi' destroyed economy, 'votebandi' destroying polity: Cong on 10 yrs of demonetisation

• Congress renews its attack on demonetisation on the 10th anniversary of the 2016 decision.

• Jairam Ramesh says 'notebandi' damaged the economy and 'votebandi' is undermining the polity.

• A Scroll analysis says over 99.3% of the demonetised currency returned to the banking system.

• The analysis finds that India remains a cash-intensive economy despite the expansion of digital payments.

The Congress on Sunday renewed its attack on Prime Minister Narendra Modi over demonetisation, saying the 2016 decision had devastated the economy and alleging that what it called 'votebandi' was now destroying the country's political system.

“Notebandi devastated the economy. Votebandi is destroying the polity. Both are the contributions of the PM,” Congress general secretary in-charge of communications Jairam Ramesh said in a post on X.

Ramesh shared a screenshot of a media report that described demonetisation as a disaster in 2016 and a resounding failure 10 years later.

On 8 November 2016, Modi had addressed the nation and announced the withdrawal of Rs 500 and Rs 1,000 currency notes, effectively invalidating 86 per cent of the cash in circulation. The government had cited the need to eliminate black money, counterfeit currency and terror financing as key objectives of the exercise.

The Congress has consistently criticised the decision on its anniversaries, calling it reckless and arguing that it damaged the economy without achieving its stated objectives. The party has previously described it as a “monumental blunder” and accused the government of repeatedly shifting the goalposts to justify the exercise.

A Scroll analysis published on the 10th anniversary of demonetisation has revisited the economic impact of the decision, questioning whether it achieved its original objectives or delivered lasting changes to the economy.

One of the most significant findings concerns the return of scrapped currency to the banking system. More than 99.3 per cent of the demonetised notes eventually returned, contradicting expectations that a substantial portion of the currency held as unaccounted wealth would remain outside the banking system.

Before the exercise, estimates cited by supporters of demonetisation had suggested that between Rs 3 lakh crore and Rs 5 lakh crore, or around 20-30 per cent of the currency held by the public, would not return. The anticipated windfall for the government did not materialise.

The analysis also questions the claim that demonetisation substantially reduced India's dependence on cash. The currency-to-GDP ratio remained broadly stable, moving from around 12 per cent in 2015-16 to 12.1 per cent in 2025-26, with temporary increases during the Covid-19 pandemic.

India's cash-to-GDP ratio stood at 12.1 per cent in 2015 and 11.3 per cent in 2024, according to figures from the Bank for International Settlements cited in the analysis. The Rs 500 note has since emerged as the dominant denomination, accounting for 85.5 per cent of all currency notes in circulation.

Demonetisation did coincide with a sharp expansion in digital payments, particularly through the Unified Payments Interface (UPI), which received a fresh push after November 2016. However, the analysis argues that the Covid-19 pandemic and the widespread adoption of smartphones also played a significant role in accelerating digital transactions.

UPI accounted for 85 per cent of payment instruments by volume in 2025, but only 9.5 per cent in value terms, according to the Reserve Bank of India's Payment System Report for December 2025 cited by Scroll.

The analysis further notes that more than 99 per cent of the scrapped currency returned to the banking system, while the anticipated immediate improvement in tax compliance did not materialise. Although direct tax collections increased over the decade, there was no sudden jump immediately after demonetisation.

On the economic cost, the analysis cites estimates from independent sources suggesting that demonetisation resulted in an output loss of 1-2.5 per cent of GDP during 2016-17. It also points to the disproportionate impact on the cash-dependent informal sector, including small businesses and workers.

The immediate disruption had affected small traders, hawkers and daily-wage workers who depended on cash for transactions and livelihoods. Long queues outside banks and ATMs became a defining feature of the weeks following the announcement.

The Scroll analysis also highlights the institutional consequences of the exercise, noting that the Reserve Bank of India and the Finance Ministry issued around 74 notifications between 8 November and 31 December 2016, repeatedly changing rules governing deposits, exchanges and withdrawals.

The Congress has maintained that the decision imposed severe hardship on ordinary people while failing to eliminate black money. On its 10th anniversary, the party has linked its criticism of demonetisation to its wider allegations against the Modi government over the country's political and electoral system.