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Demonetization in India: Superfluous discovery and money laundering

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  • Shruti Rajagopalan

    (State University of New York)

Abstract

Demonetization policy of 2016 in India anticipated that a large share of the old notes was held by tax evaders and criminals, who, in the interest of avoiding legal scrutiny, would not exchange their currency for the new notes in circulation. The Indian government expected a revenue windfall between 10 and 33% of the currency in circulation through unreturned notes. After the demonetization policy, entrepreneurs discovered ways to effectively and swiftly launder money and 99.3% of the revoked currency was returned within the sixty-day window. This paper discusses the kinds of entrepreneurship and superfluous discovery processes post-demonetization that helped circumvent the intended goals of demonetization.

Suggested Citation

  • Shruti Rajagopalan, 2020. "Demonetization in India: Superfluous discovery and money laundering," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 33(1), pages 201-217, March.
    • Handle: RePEc:kap:revaec:v:33:y:2020:i:1:d:10.1007_s11138-019-00465-w
    DOI: 10.1007/s11138-019-00465-w
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    References listed on IDEAS

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    1. Baumol, William J., 1996. "Entrepreneurship: Productive, unproductive, and destructive," Journal of Business Venturing, Elsevier, vol. 11(1), pages 3-22, January.
    2. Andrews, Matt & Pritchett, Lant & Woolcock, Michael, 2017. "Building State Capability: Evidence, Analysis, Action," OUP Catalogue, Oxford University Press, number 9780198747482.
    3. Bruce L. Benson, 2004. "Opportunities Forgone : The Unmeasurable Costs of Regulation," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 19(Spring 20), pages 1-25.
    4. von Mises, Ludwig, 1957. "Theory and History," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 1, number mises1957.
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    Cited by:

    1. Germain Belzile & Rosolino A. Candela & Vincent Geloso, 2022. "Regulatory capture and the dynamics of interventionism: the case of power utilities in Quebec and Ontario to 1944," Public Choice, Springer, vol. 193(1), pages 35-61, October.
    2. Kayenaat Bahl & Ravi Kiran & Anupam Sharma, 2022. "Impact of Drivers of Change (Digitalization, Demonetization, and Consolidation of Banks) With Mediating Role of Nature of Training and Job Enrichment on the Banking Performance," SAGE Open, , vol. 12(2), pages 21582440221, May.
    3. Chanda, Areendam & Cook, C. Justin, 2022. "Was India’s demonetization redistributive? Insights from satellites and surveys," Journal of Macroeconomics, Elsevier, vol. 73(C).

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    More about this item

    Keywords

    Entrepreneurship; Superfluous discovery; Demonetization; India;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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