Geopolitics Report: A Study of Indian Bank Notes Demonetisation 2016

This report provides a geopolitical analysis of the 2016 demonetisation of Indian bank notes. It begins with an introduction to geopolitics and its relevance to the case study. The report then offers an empirical description of the crisis, detailing the sudden banning of Rs 500 and Rs 1000 notes and the resulting social, economic, and political impacts. It identifies the key interests involved, including the government's intention to curb black money and counterfeit currency, and the widespread problems faced by citizens due to cash shortages and restrictions. The report explores the causes of the crisis, attributing it to the poorly planned implementation and lack of systematic procedures. It also provides recommendations for resolving the dispute, emphasizing the need for sufficient note supply and alternative options for citizens. The report concludes that while the government's intention was positive, the execution of the demonetisation was flawed, leading to negative consequences. The report references several academic sources to support its findings.

Running head: GEOPOLITICS
2016 Indian Bank Notes Demonetisation
Name of the student:
Name of the university:
Author note

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
Empirical description of the crisis:.........................................................................................2
Interest involved directly in the crisis:...................................................................................3
Cause of the crisis:..................................................................................................................5
Recommendation for resolving dispute:.................................................................................6
Conclusion:................................................................................................................................6
Reference:..................................................................................................................................7

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Introduction:
The term geopolitics is a combination of Geography and Politics. The main
objective of this subject is to define the effects of the geographical events on the politics of a
country and how it creates impression on the international relations. However, geopolitics not
only deals with the international relations but discusses with inter-continental geopolitical
issues also. Different ranges of the political power within a country and relation between the
political actors are included within the parameters of geopolitics. In the words of Christopher
Gogwilt (2016), the modern geopolitics are discussing with domestic political relations.
Every country has their geopolitical issues. This report discusses with the effect of
demonetisation and attempts to understand the main driving force behind the crisis and also
describes the impact of the crisis on the social, economical and political background of the
country.
Discussion:
Empirical description of the crisis:
In every country, the issue with black money is important in nature. In the
developing countries like India, the effect of black money on the economics is huge. To curb
this phenomenon, Indian Government under the leadership of Prime Minister Mr. Narendra
Modi had implemented certain drastic changes in the financial environment in 2016 by way
of the process of demonetisation (Dhingra, & Menon, 2016). The Indian government
suddenly call for a meeting and banned the Rs 500 and Rs 1000 Rs or rupees are the terms of
Indian currency). The government decided to devalue the currency notes of 500 or 1000 after
the midnight of Eighth November 2016. The main objective of the government behind this
decision was to cut back the issue relating to fake notes, but such sudden announcement has

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compelled the general citizen to face serious problems to maintain their daily life (Gupta,
2017). The aftermath effect of the announcement has made a great crisis in the social,
political and economical condition of India. The international relations have also been
affected by the demonetisation. The Indian SENSEX had fallen down and the citizen had to
face severe cash shortage due to this. The process of demonetisation has been criticised by
several economists as well as bankers and strikes has been made against such freak decisions
of the Indian Government. However, government has given fifty days time span to exchange
the old notes to new notes, but in an over populated country like India, fifty days are very
impractical for exchanging all notes. Further, the citizens could not able to withdraw many
currencies from the banks as there were limitations. The people of every societal stages had
raised their voice against such arbitrary action and titled the action as “Carpet Bombing”. T.
N. Ninan had quoted the process as badly executed idea. However, there are certain positive
effects too. The scope of fake money and rate of human trafficking had been reduced in a
record rate. The extortion cases were reduced. There was a rise observed in the Gross
Domestic Products and change has been observed in the cashless transactions (Mali, 2016).
On the other side, a notable stock market decline has been noticed and few deaths had been
reported that time.
Interest involved directly in the crisis:
The main intention of demonetisation is to stop the curse of fake notes and active
effectiveness of black money. The announcement of banning the Indian currencies had
shaken all the stages of the society. Many black monies had been recovered by the Special
Tasks Forces and the crimes related to the human trafficking or extortions have been reduced
and notable growth in the GDP has been observed. According to Mr. Narendra Modi,
Honourable Prime Minister of India, this is a wide and bold step towards the recovery of
black money and direct impression of fake money on the Indian Economy. According to the

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report published by Reserve Bank of India (RBI), near about 99% old notes were come back
or credited in the banks and the system.
Source: ("Reserve Bank of India - Annual Report", 2018)
However, there were certain loopholes too and it has been observed the Indian
Economy was very much affected by such decision. Most of the problems have to be faced
by the Indian citizens and the whole nation was suffered from cash shortage. Lengthy queues
of customers had been observed waiting outside the banks and many events of deaths were
reported at this time. The Indian stock market was vehemently affected by the decision
(Mahajan & Singla, 2017). Stock market was crashed by the dual effects such as
demonetisation and US presidential election. The SENSEX was witnessed a rapid declination

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in the economic market. Over 750,000 trucks were detrimentally affected by the cash
shortage and Indian transportation system was rammed (Chauhan & Kaushik, 2016). The
agricultural system was also affected by the money demonetisation. Cash scarcity has
affected the small business industries and many youths had lost their job.
Cause of the crisis:
The announcement on banning the Indian currencies amounting Rs 500 and Rs
1000 was an unscheduled matter and the whole nation get only four hours to exchange all
their old monies with the new currencies and it is an impossible event for the over populated
countries like India. According to Amartya Sen, renowned Economists, the decision is
gigantic mistake of Indian government. However, as per the government report, many people
are not given the tax correctly and therefore; a serious monetary crisis had been observed in
the government fund. The government had made an attempt to curb this tax evasion and stop
the harmful effect of fake money to destroy the financial resource of the terrorist gangs.
However, the banning of money was not well planned and this announcement has
fierce the common people and they were harassed in their daily life. They had to face lots of
problems and could not buy the essential commodities (Bhavnani & Copelovitch, 2017).
They were forced to postpone their important societal programs. Sufficient money or cash
were not supplied to the banks and the huge cash deficiency had cropped up. Active agitation
against the decision were made and customers had to wait before the banks or ATMs for long
and many senior citizens were fall ill and some of them died. Even the banks had to face
great dilemma as there were insufficient money supply. Lack of systematic procedure was the
main responsible factor in this case and the effect of crisis can be seen in every stages of the
society (Dasgupta, 2016).

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Recommendation for resolving dispute:
Active agitation were made against the bank note demonetisation and according to
T. N. Ninan, the decision of banning the currencies all on a sudden is a reflection of
government inability to provide systematic approaches to the Indian citizen. Certain Public
Interest Litigations were filed against such arbitrary decisions of the Indian government
before several High Courts and the Supreme Court as well. The act of the government is quite
legal as per section 26 sub-section (2) of the Reserve Bank of India Act 1934. This provision
has empowered the Government to take any decision to ban notes. However, the process of
banning currency notes was not perfect. The banks, either national or regional must be
supplied with enough notes and alternative options should be given to the common people. A
thorough monetary estimation was required by the government before taking such important
decision. The government should have to provide reasonable time to the citizen to exchange
their money.
Conclusion:
To sum up, it can be stated that the intention of the government behind banning the
above noted currencies was good. However, the process of execution was improper.
Government has made a fickle decision and negative impression was created on the common
people. The main objective of the government was to eradicate the issue regarding fake notes,
but such sudden announcement has compelled the general public to face serious problems to
maintain their daily life (Sharma, 2017). However, certain people called the process as a step
towards modified India as a tendency has been observed to go for the cashless transaction
system. The government should make effective plan for this. The report can be concluded
with the facts that the intention behind demonetisation was good, but it was executed in an
improper way.

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Reference:
Beyes, P., & Bhattacharya, R. (2017). India’s 2016 demonetisation drive a case study on
innovation in anti-corruption policies, government communications and political
integrity. OECD Global Anti-Corruption Integrity Forum.
Bhavnani, R. R., & Copelovitch, M. (2017). The Political Impact of Monetary Shocks:
Evidence from India’s 2016 Demonetization⇤.
Chauhan, S., & Kaushik, N. (2016). IMPACT OF DEMONETIZATION ON STOCK
MARKET: EVENT STUDY METHODOLOGY. INDIAN JOURNAL OF
ACCOUNTING, 127.
Dasgupta, D. (2016). Theoretical Analysis of ‘Demonetisation’. Economic and Political
weekly, 51.
Dhingra, S., & Menon, A. (2016). Demonetisation is not the way to tackle corruption. South
Asia@ LSE.
Glazzard, A. (2016). ‘The inciter behind’: Spymasters and the Eastern Logic of Russia.
In Conrad’s Popular Fictions (pp. 85-110). Palgrave Macmillan UK.
Gupta, D. K. (2017). Demonetization in India 2016--Mother Tongue Friendly E-Delivery
Banking Channels for Cashless Growth.
Mahajan, P., & Singla, A. (2017). Effect of demonetization on financial inclusion in India.
In International Conference on Recent Trends in Engineering, Sicince &
Management (pp. 1282-1287).
Mali, V. (2016). Demonetization: A step towards modified India. International Journal of
Commerce and Management Research, 2(12), 35-36.

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Patrick, M. (2016). Black Money, Corruption and Demonetisation (No. id: 11471).
Reserve Bank of India - Annual Report. (2018). Rbi.org.in. Retrieved 13 January 2018, from
https://www.rbi.org.in/scripts/AnnualReportPublications.aspx?Id=1181
Sharma, T. P. (2017). Effects of Demonetisation on the Retail Business of
Pune. International Journal of Advance Research, Ideas and Innovations in
Technology, 3(6), 244-251.