India has demonetised high-value currency before, in 1978

Even then the move was aimed tackling the issue of the black money economy which was quite substantial at that point of time.

By: Express Web Desk | New Delhi | Updated: November 8, 2016 11:36 pm
Rs 10,000 note that was discontinued in 1978. Rs 10,000 note that was discontinued in 1978.

While Prime Minister Narendra Modi might have taken India by surprise, the move to demonetise high denomination notes in not unprecedented in Indian history. In January 1978, the Indian government had demonetised that Rs 1,000, Rs 5,000 and Rs 10,000 notes in a bid to counter black money in the economy.

Even then the move was aimed tackling the issue of the black money economy which was quite substantial at that point of time. The move was enacted under the High Denomination Bank Note (Demonetisation) Act, 1978. It was termed as “an Act to provide in the public interest for the demonetisation of certain high denomination bank notes and for matters connected therewith or incidental thereto.”

Under the law all “high denomination bank notes” ceased to be legal tender after January 16, 1978. There was a prohibition of transfer and receipt of high denomination bank notes. Plus, all banks and government treasuries had to send to the Reserve Bank the total value of high denomination bank notes held by it at the close of business on the January 16.

People who possessed these notes were given till January 24 the same year — a week’s time — to exchange any high denomination bank notes. The one big difference with the announcement Tuesday is that Rs 1,000 and higher value notes were almost impossible to possess then for the common man given the value of these amounts then.

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  1. S
    Srikant kr
    Nov 9, 2016 at 6:11 am
    1. A
      Nov 15, 2016 at 12:16 pm
      Good concept,good move,but very bad methodology bad execution.suffering only common man who don't have black money.i agreed it is good decision but who know after corruption will stop in govt offices.
      1. D
        Dec 30, 2016 at 3:46 am
        i am so happy
        1. N
          Nishant Kishore
          Nov 9, 2016 at 3:55 am
          I would stop short of drawing comparision but the move does not seem to have a foresight. I would call it for what it is. A show of decisiveness, which appears bold and positive after all those Manmohan years. A word of caution though, Modi's penchant for symbolism and ball display may cost us someday. For now 10 points to him, for doing something!
          1. R
            Raj Saksena
            Nov 10, 2016 at 12:15 pm
            If the motive is to eradicate black money and shadow economy, why introduce 2000 rupee note??? I'm cluelesslt;br/gt;This would mean in another 50 years, government will need to demonetise again (keeping busy :) )
            1. C
              Cristoval Jes%c3%bas
              Nov 10, 2016 at 11:01 am
              No. 1978 was not a dark time in India. But 2016 is.
              1. S
                Sanchayan Sarkar
                Nov 9, 2016 at 7:25 am
                1978 IS different from 2016 . We have a digital infrastructure now , free market economy and a lot of transparency . 1978 were dark times.
                1. S
                  sanjay pandey
                  Nov 10, 2016 at 11:19 am
                  i should have guts to take this type of bold decision.. this type of move was is pipeline for say about last 8-10 yrs. but the congress govt. failed to implement.. like the pokhran test which was taken by sri atal bihari vajpayee.. the decision was there... but no one dare to bell the cat. i would like to give a big salute to mr. narendra modi.
                  1. S
                    Nov 10, 2016 at 1:34 pm
                    thay move really effect to corruption black money i am apprised this movemant
                    1. S
                      Nov 14, 2016 at 7:44 am
                      This was indeed a good move to curb black money but releasing 2000 notes is not a good move they should have just released 100 rs;br/gt;1 month prior he should have just informed the banking team to release only 100 rs notes and then he should have announced, then people would have had money for the daily routine and there would not have been so much of kios.
                      1. S
                        Srinivasan Thyagarajan
                        Nov 11, 2016 at 11:44 am
                        Time to make AK who used his platform to rise to CM Delhi,understand
                        1. B
                          Nov 9, 2016 at 4:30 am
                          As the author mentions, in 1978, 1000, 5000, 10000 notes were not at all common. So the social m impact was very little if;br/gt;lt;br/gt;Today, 500, 1000 notes are used by almost all sections of society. Hence the impact on undeclared income is going to be a lot bigger. Many actually rich but deemed by society as poor people are going to come to the surface now. There are huge number of traders who never pay tax, are completely below the radar, and now they have no choice but to surface. lt;br/gt;lt;br/gt;This is excellent news for the country, and we'll see a lot of tax being collected in the coming years.
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