The Reserve Bank of India (RBI) declared on May 19, 2023, that it will stop issuing banknotes with a denomination of Rs 2000. Individuals would have until September 30, 2023, according to the ample period allowed by the RBI, to deposit or swap the notes. The RBI's Clean Note Policy, which strives to give the public high-quality currency notes and coins with increased security measures, is what led to this action.

This unexpected move had several advantages. The country's economy stabilised, inflation lowered, counterfeiting stopped, informal economic activity was made transparent and black money and unreported income would ultimately be flushed out. The country's tax base and revenue would grow, bringing prosperity.

The fact that demonetisation entirely destroys the counterfeit money lobby is one of its largest benefits. The use of printed counterfeit money notes is eliminated when legal tender is revoked.

Demonetisation also has an big influence on people's propensity to keep cash in their houses. This is because it is extremely difficult for consumers to swap their money for the freshly minted currency in banks as a result of the banknotes' loss of legal tender status. As a result of consumers not keeping cash on hand in their homes, the banks have more liquidity since they are receiving more money presently.

Demonetisation does have some negative repercussions, though. Due to the unexpected withdrawal of the old currency and the restricted supply of the new currency, the conversion procedure might have caused some disruption. Consumer spending may have been reduced, and corporate activity and total economic output may have taken a downfall.

Demonetisation implementation also entails high administrative expenditures. It can be costly to print fresh currency notes, calibrate ATMs, and spread information about the adjustments. These expenses are often covered by the government, which can put a strain on the economy and take money away from other vital areas or social welfare initiatives.

In conclusion, there are conflicting views on the demonetisation's overall effectiveness in reducing black money and fulfilling its stated goals, therefore its success is still up for question. It is still a divisive economic strategy with supporters and opponents. Although it had admirable goals, its implementation and effects make one wonder about its success as a whole. Learning from the benefits and drawbacks of demonetisation will help governments make future economic decisions that are more educated and well-rounded as they continue to assess such policy actions.