Demonetisation at 10: cash has more than doubled even as UPI has boomed

Ten years ago, on the night of 8 November 2016, Prime Minister Narendra Modi announced that ₹500 and ₹1,000 notes would stop being legal tender within hours. Those notes made up 86% of the cash in circulation. A decade later, the numbers show that India has gone digital without giving up cash.

Cash

After the shock of 2016-17, when currency in circulation fell to 8.7% of GDP from 12.1% the year before, cash came back quickly. It rose to 14.4% of GDP in 2020-21, when people held on to cash through the pandemic. In absolute terms it has more than doubled since the note ban, to roughly ₹41 lakh crore at the end of March 2026. Sources give slightly different totals because they use different dates.

Digital payments

Digital payments grew alongside. The Unified Payments Interface (UPI), launched a few months before the note ban, now handles more than 25 billion transactions a month, worth over ₹31 lakh crore. QR codes are now common even at small shops and street stalls.

Black money

The money that was supposed to vanish did not. The Reserve Bank of India’s final count, in 2018, showed that 99.3% of the withdrawn notes came back to the banks; only about ₹10,720 crore did not return. Critics say this shows that most unaccounted wealth is held in property, gold or abroad rather than in cash. The government’s supporters say the deposits brought many more people and transactions into the tax net.

Fake notes

The record is mixed. Detections of counterfeit notes in the banking system fell after 2016, but fakes of the new ₹2,000 note appeared quickly, rising from 638 detected in 2016-17 to 17,929 the following year. An analysis by The Hindu finds fake-note detections rising again in recent years. The RBI’s figures also leave out notes seized by the police. The ₹2,000 note itself was withdrawn from circulation in 2023.

In January 2023 the Supreme Court upheld the decision by a 4-1 majority, ruling that the process followed was lawful. That settled the legal question. Whether the note ban achieved what it set out to do is still argued over by economists.