Demonetization: When 86% of India's Currency Disappeared (Gabriel Chodorow-Reich, Harvard)

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3 жыл бұрын

In November 2016, India’s prime minister announced that all bills over 500 rupees were demonetized in an attempt to fight corruption. As a result, 86% of India’s currency disappeared overnight! Harvard’s Gabriel Chodorow-Reich and his coauthors took advantage of this sudden natural experiment to examine the role of money in modern economies.
Different districts of India took different approaches to demonetization-some replaced the currency quickly while others took longer. But studying the various effects was difficult because of a lack of reliable data.
By using employment surveys-simply measuring whether people are working-and satellite-based night light activity-measuring how much light is being generated in a particular location-Chodorow-Reich and his team were able to compare economic outcomes across regions with a high degree of accuracy.
This video is based on the following paper: Cash and the Economy: Evidence from India's Demonetization by Gabriel Chodorow-Reich, Gita Gopinath, Prachi Mishra, and Abhinav Naraynan. scholar.harvard.edu/chodorow-...
More of Gabriel Chodorow-Reich’s work: scholar.harvard.edu/chodorow-...
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Пікірлер: 109

@pushkarmahale912 3 жыл бұрын

Why is anybody not talking about introduction of digital payments post demonetization. Last month India clocked 1.6 billion digital transactions via UPI. That was one of the silver lining from this faux pas.

@N0Xa880iUL 3 жыл бұрын

Yes that is the good out of it. It's not like it was meant to be perfect. They knew the ill effects but went with it. For sake of future progress. The black money though, was not hit at all.

@MarginalRevolutionUniversity 3 жыл бұрын

Here’s a free assignment to help connect this video to class: mru.io/faf55 More professor resources: mru.io/professor-resources-98db3 High school teacher resources: mru.io/high-school-resources-90ab9 This video is from our Economists in the Wild series: mru.io/economists-wild-51481 Get updated when we release the next video: mru.io/subscribe-14200

@indiantraveller2525 3 жыл бұрын

After very long time it is soo excited to get MRU updates......!!!😍😍😍

@samay4596 3 жыл бұрын

Demonetisation is a classic case of governments, economists and public assumptions about economy going wrong all at once. My family faced the challenge first hand because my father runs a grocery store here. It was a massive task which was undertaken by the government of India equally cooperated by the resilient citizens of the country. Had it been in any other country, riots would have broke out. Government failed in its primary objective, but it did succeed in formalising the economy to a large extent. Fruits of which are now bearing towards the end of 2020. Yes in 2020 when the world is going through a tough time, India is bouncing back more strongly than others. It gave birth to a unique UPI based transaction system which has revolutionised the lives of people in more than just one way. It is the most safest and fastest internet based payment system anywhere in the world. It recorded a record breaking 2 Billion transaction mark in the month October 2020.

@shreyapasari9805 3 жыл бұрын

I agree that there is a huge dearth of high quality data - it's what majority of Indian researchers suffer from. I myself have experienced it first hand. But could you please mention your references and the ones you did mention aren't that verified as the videos and the materials used in here comes from a political party who are heavily criticised for manipulating the data for their own benefits. So if you have written a paper supporting your arguments in this video and used other references, I would love to go through them as the policy of demonetization can be used as a lesson for both the future governments and economists and would like to contribute too if possible. Thanks.

@matiascova 3 жыл бұрын

Check his webpage, this is all based on his paper.

@shreyapasari9805 3 жыл бұрын

@@matiascova Thank you!

@samay4596 3 жыл бұрын

As a student of Economics and a gold medalist in it, i think i have at least, if not much, some sort of credibility to make remarks on the Indian economy. Indian governance system is a multifrontal system where no one particular agency has absolute power to control things. The famous check and balance form of governance probably exists strongly in India more than anywhere else. As far as data is concerned, the problem in India is not the quality of data but the timely release of data. They don't fudge their data as much as they fail to update newer data on time. May be because of he complex governance system and society in place.

@kgotatsomasoabi 3 жыл бұрын

I remember this so vividly, and I'm South African. I remember reading how beneficial this move would be to the average Indian, only for it to cause chaos and economic anarchy.

@fufu3539 3 жыл бұрын

The contraction is bad. Of course, inflation eventually is. Generally, inflation is better for an economy, but eventually it isn't. So, deflation has to be done, but it cant be done without pain. When the right time is I cant say, however since money began thousands of years ago both have happened, yet we act like it's a mystery. Is it just that economy is so dry people don't care to learn from it? Perhaps.

@user-fg6xj2tq5q 3 жыл бұрын

its a disaster

@abhilashkhajuria Жыл бұрын

Yes it pushed indian economy on back seat

@samarthbagwe1736 Жыл бұрын

Would that be since our economy will be Third largest in 2027 While south Africa still Suffers from. Past apartheid Shocks and racism and water scarcity and Stagnated economy

@abharjaminonpremanand4317 Жыл бұрын

@@abhilashkhajuria , buhjjy6jjyy

@Ekricsoot 3 жыл бұрын

That phenomenon happened in Venezuela a few years a go in one of the many devaluation processes we've had.

@gauravpallod4768 3 жыл бұрын

omg! an upload after sooo long

@yakkyuu12 3 жыл бұрын

Love the MRU- great legitimate, educational information you can totally trust!!

@williamallison858 3 жыл бұрын

Damn so this is what Michael Phelps has been up to...

@AD-mj6sw 9 ай бұрын

One thing for sure happened Counterfeit money vanished and a rogue country doing all this counterfeit is in Economic trouble . I am from a Middleclass business family I didn't face much issue plenty of time was given to exchange currency and business was as usual

@RankaNikunj 3 жыл бұрын

Actually government missed the important point that Black money was not simply kept in Cash. Most black money was converted to Gold and Property/Real estate Thats why its said that no one in the world knows how much Gold Indian people possess

@samarthbagwe1736 Жыл бұрын

The gold is also our advantage Now as Situations unfold Countries are now buying more gold But in india Black money is mostly kept in cash That was the target Not all black money can be Flushed out but this could send a message

@kbenjaminmark 3 жыл бұрын

Do one session on demonization. My strong urge says, that there should be another demonization with right perspective. If the scope was to remove black money, give all citizen time to deposit money in bank without any time line. Announce that paper money stands invalid, and all transaction needs to be in card, check, upi, etc. Game over. All money had turned white. Now work with PAN and see the deposits of crores mapping with Aadhar card. All rich will be caught, and poor will not feel anything bad.

@twistednerve6290 3 жыл бұрын

facepalm

@doaflamingo3713 2 жыл бұрын

@@twistednerve6290 you have no idea how many people still believe this comment

@ThePeterDislikeShow 3 жыл бұрын

Except the big criminals don't use cash. They use gold.

@miranda9691 3 жыл бұрын

But Will this change really help against corruption ?

@tushargupta40 3 жыл бұрын

In India, it didn't. The Reserve bank of India reported that it received 99.3% of the discontinued currency. The move caused chaos in the country and offered absolutely no benefits.

@shreyapasari9805 3 жыл бұрын

On paper, it was presumed that it would but in reality it affected the below poverty line population the hardest. And people are still facing the consequences of it and with this pandemic, Indian economy had taken much harder hit to recover from.

@joecurran2811 3 жыл бұрын

Not that much.

@miranda9691 3 жыл бұрын

I tought that too, this is trying to treat symptom and not the disease itself

@joecurran2811 3 жыл бұрын

@@miranda9691 I mean it wouldn't have been that bad if they had all the new money ready beforehand.

@AB-nx7zm Жыл бұрын

india is now largest digital economy

@vinm300 3 жыл бұрын

Spain 1600-1700 were constantly devaluing their currency, so folks kept all silver and gold coins locked away. Travellers said there isn't a gold coin in the country. Specie became very scarce and folks reverted to a barter economy. The whole thing was a disaster. Added to the triple taxation of peasants (Tithe to church, tax to landlord and tax to crown) and the tax exemption of the nobility and church, Spain's endemic failure to invest in infrastructure (travellers said roads were a dirt track - it cost as much to transport spices from Cádiz to Madrid as it did to ship them from the East), and you have an Empire in terminal decline.

@ajaypandey8354 Жыл бұрын

Fake currency which were more real than actual currency from Pakistan ws the main reason behind demonitization

@pushkarlakhe13 3 жыл бұрын

Who else came here from the mail notification ?

@rajaking2789 3 жыл бұрын

This is daylight blunder.. it's doesn't make any sense..

@Mujangga 3 жыл бұрын

Why don't they wait until the new money is printed before canceling the one?

@lakshitajoshi6139 3 жыл бұрын

As far as I remember, the announcement was made at 8-9pm that the currency would be invalid from midnight. This was because no one was supposed to anticipate it. It was supposed to be a shock for everyone, including most government workers, so that people would not have time to deal with their black money. This is the official rationale but critics say that it was just an unplanned and reckless policy action which wasn't thought through and was passed without adequate consultation.

@Mujangga 3 жыл бұрын

@@lakshitajoshi6139 Either way, it's sickening the a government has the power to do something like that

@lakshitajoshi6139 3 жыл бұрын

@@Mujangga agreed

@vkray 3 жыл бұрын

Lakshita Joshi I voted BJP last time. It was done to win UP election.

@vkray 3 жыл бұрын

It was done to win UP election.

@saipimol 3 жыл бұрын

Demonization isn't bad but the way Indian government did it with short span of time. The no. of cash printed after 1947 were to be eliminated within one year isn't going to work. The question should be how is India less effected by such drastic changes? We all know such drastic changes will bring suffering to commoners

@pushkarmahale912 3 жыл бұрын

The introduction of digital payments framework helped smooth the negative consequences of demonetization. Before 2016, I rarely did a digital payment but post 2016, almost all of my payments are done digitally.

@pushkarmahale912 3 жыл бұрын

Economically weaker section suffered a lot initially. Some are still suffering.

@otistically 2 жыл бұрын

Lol I didn't knew demonetization whould be THAT powerfull

@TTT-uk3cn Жыл бұрын

Pls make another video with latest findings on demonetisation that Pakistan was printing and smuggling Indian currency. Now Pakistan is broke after demonstration 😂

@Cosmos_1111 3 жыл бұрын

Check out the Root for the idea and Implementation of Demonetization in India by the great Dr. B.R Ambedkar in his Book - The Problem of the Rupee: Its Origin and Its Solution.. which was published in India long ago in 1923..

@gurjotsingh8934 2 жыл бұрын

What's the crux of it? Is he in the support of fiat currency?

@-ShubhamBhatt 2 жыл бұрын

Kindly summaries if you have read it.

@ayaanmukherjee4701 2 жыл бұрын

it was such a waste

@SMCGPRA Жыл бұрын

Only disadvantage of demonetisation was to economy of Pakistan and their cronies in India

@valeriexoxo Жыл бұрын

When people are listening to a video it is extremely annoying when one stops speaking (narrating) and all of a sudden we are expected to know you’re going to start typing and now we have to start reading your captions. Why? Just speak throughout the video. We’ll go to read an article if we want to read.

@KishorKumar-br5rj Жыл бұрын

Great thing happened to India

@goodlife9912 3 жыл бұрын

Anybody collecting black money will never keep it in cash. They will buy gold and property. This was a foolish move which destroyed small businesses.

@sudhanshupandey614 2 жыл бұрын

Nah my father is an income tax officer here In india so ik there are many people who keeps millions of dollars cash (in indian rs) and gets caught during income tax raid. The move was actually beneficial in this sense + funding of terrorist organisation was also done through cash, like this there were n no. of benefits of eradicating the old currency but yeah I do understand that we the common people faced a lot of issues during that time but it was indeed a step in the right direction.

@akshimjames5011 2 жыл бұрын

@@sudhanshupandey614 The move had its plus points, but it gave our economy a good hit. But, now slowly we are recovering from it.

@rushwinvaishnav3356 2 жыл бұрын

@@sudhanshupandey614 i know many officers came to us for help to register their money

@samarthbagwe1736 Жыл бұрын

Nah they kept it in cash We did our research And Took the property that was bought with that cash 💪

@venugopal-wp4xw Жыл бұрын

Seriously guys....believing this farce and nonsense. The real benefit is mammoth and in plain view of whoever that wants to see. Pity you educated illiterate.

@v1nAyA 3 жыл бұрын

Demonetization is not to fight corruption, but to have control over inflation. Inflation means every year currency value decreases, of what one can buy today with the same amount of money is reduced next year. So, say rice costs INR 100 right now, next year because of inflation, it would be INR 110. This is because more currency is printed and circulated every year thanks to debt and how currency works today. So, pre-monetization inflation was out of control of RBI, so what costs INR 100 today would cost either INR 110 or INR 115 or even INR 121. Average inflation was around 9% and 21% being the highest recorded per quarter. So, basically, Govt. or RBI wouldn't control it and as a consequence international trade became more taxing to India. Today's after demonetization inflation stands around 4% on average or what costs today INR 100 will cost INR 104 next year. This confidence in currency has made Rupee, viable more stable in the International market as well as to curb wild swings in prices of commodities. It was more RBI move than Govt., of India. RBI was pushing from 2010 only, for Govt., to take action against Inflation. Finally, NDA govt. approved, and it was done. Surely average inflation has come down and people will benefit in the long run. Imagine FD interest was 10% back then, but inflation was 9% so, the actual gain was only 1% if FD holder looked at prices of common commodities and done some basic research. So, Banks robbed FD holders money and they became rich. Whereas now, inflation is 4% or below, and FD stands at 7% so, an actual gain of 3% to FD holders. Like this many many investments revolve around Inflation. And common people can enjoy a stable currency.

@san9292 3 жыл бұрын

I don't think demonetization impact on inflation. Inflation is account to sum of all circulating money and bank deposits.

@v1nAyA 3 жыл бұрын

@@san9292 Haha its what textbooks say... In reality currency, today is like a commodity, which doesn't grow in plants nor can anyone mine it, so only exclusively Central Banks and Govt., control inturn who are controlled by big banks, brands... So, imagine they only give you money and ask you back as interest, which everyone works off their time to see mostly its vanished from wallets to big brands and mostly their useless produces. Real estate prices are high not because there is no land but because most of this currency circulates in hands of real estate developers because one company can take a large sum of currency...

@san9292 3 жыл бұрын

@@v1nAyA Your assumption is good. But Demonetization doesn't mean to abolish the currency, It is just a swap of a new denomination. only 2% of total cash note is in supply rest are in digital, even that 2% can be swapped for the new denomination. Hence the demonetization should no effect on inflation.

@necromancer1765 3 жыл бұрын

That's a lot of nonsense to justify a blatantly illegal scam. Demonitization was India's biggest scam till date, wrapped in good intentions so that it could be sold to the gullible. Inflation is a deliberate method to rob people of their money. An indirect tax. Govt creates the problem and then offers a bogus solution which is a bigger scam. Problem - reaction - solution.

@v1nAyA 3 жыл бұрын

@@necromancer1765 Ofcoarse whole system is a scam... From the very start of Banking system like the role of Central Banks, wherein no Central Bank in the world has to balance their balance sheets, they can generate any money and buy real assets and write off liabilities. When the whole system of the world is a scam one country like ours cannot change easily with the current political system... Political system and scam go hand in hand... Only people have to educate themselves and one day win petitions in Supreme Court who might inturn bring change...

@shikharsingh1848 3 жыл бұрын

Modi increased black money in India due to demonetization

@user-md2qy5qi8h 3 жыл бұрын

How

@vaibhavsoni7040 3 жыл бұрын

blind statements, idiot.

@mayankgupta7061 3 жыл бұрын

Not at all😂

@whitewhite4462 Жыл бұрын

Matlab nahi hai but likhna chaihe.

@santoshke4655 Жыл бұрын

Pakistan economy slides down since 2017.

@tsar6670 2 жыл бұрын

I liked demonetisation because it has helped india fasforward to digital payments quickly.

@abhilashkhajuria Жыл бұрын

Digital payments emerged because of internet penentration after demonetisation

@sample1306 3 жыл бұрын

To idiots talking about digital transactions, the same digital transactions are 10 times more in China, one of largest IPO in the world ANT group, a fintech company is entering the markets and there lot more. All the fintech in China and digital transactions are happening without demonetisation of currency.

@abhilashkhajuria Жыл бұрын

Bro these people can't differentiate between micro and macro economy and u expect them to understand this blunder 😁