When India Killed Off Cash Overnight

HBR IdeaCast

Harvard Business Review

Leadership, Entrepreneurship, Communication, Marketing, Business, Business/management, Management, Business/marketing, Business/entrepreneurship, Innovation, Hbr, Strategy, Economics, Finance, Teams, Harvard

4.4 • 1.9K Ratings

🗓️ 27 June 2018

⏱️ 24 minutes

🔗️ Recording | iTunes | RSS

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Summary

Bhaskar Chakravorti, the dean of global business at The Fletcher School at Tufts University, analyzes the economic impact of India’s unprecedented demonetization move in 2016. With no advance warning, India pulled the two largest banknotes from circulation, notes that accounted for 86% of cash transactions in a country where most payments happen in cash. Chakravorti discusses the impact on consumers, businesses, and digital payment providers, and whether Indian policymakers reached their anti-corruption goals. He’s the author of the article “One Year After India Killed Off Cash, Here’s What Other Countries Should Learn From It.”

Transcript

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0:39.1	Greencore Michael. On November 8, 2016, India's Prime Minister, Norendramodi announced a new policy that sent
0:51.6	shock waves through his country's economy.
0:54.0	Brothers and sisters, to break the grief of corruption and black money,
1:00.0	we have decided that the 500 rupee and 1,000 rupee currency notes presently in use will no longer be legal tender from midnight to night.
1:19.0	Overnight most of the country's paper money was simply no longer money anymore.
1:24.1	This policy is called demon and in a country where most transactions still happen with
1:29.3	cash it was a drastic measure to say the least.
1:33.0	Why do it?
1:35.0	Modi said India had to.
1:36.0	He said tax abators and criminals were piling away loads of cash.
1:40.0	The 500,000 rupee notes hoarded by anti-national and antisocial elements
1:49.0	will become just worthless piece of paper.
1:55.0	Did criminals end up getting stuck with those worthless pieces of paper?
2:00.0	Was everyone else left with a stronger economy.
2:03.1	Here to break down what happened is Baskar Chuck Rivorti.
2:06.5	He's an economist and the Dean of Global Business at the Fletcher School at Tufts University.
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