If demo was any good you would see such exercises all over the world on a regular basis.
IndianBanks are in bad shape because of loans they have made and have to continue to make to politically connected individuals.
This affects state banks mind you - private banks never has that problem.
As Raghuram Rajan pointed out, the reason banks can’t make loans is because many firms have terrible credit. That’s what makes loans unaffordable to them.
And as current reports show - All of that money is back in circulation - so the banks are back to square one.
2 - if someone is telling you this, then they are confusing matters and are misunderstanding trade.
1) Volatility will always exist
2) foreign investments are something we want because trade and more resources makes our economy grow much faster
Additionally: black money is a misnomer - it’s money on which tax has not been paid.
A large portion of India’s economy is informal, and entirely cash based AND also below the taxable slabs - this is OK.
It’s a transition point for an economy as it goes from 1970 to 2030.
What people are upset about are corrupt people who cheat the system and then launder that money.
All black money is therefore not corruption.
But demo has not stopped corruption, and even during demo the corrupt found out ways to launder their money.
Not to mention none of this was free and necessitated a shut down of the entire economy - for nothing.
This move cost us billions in opportunity cost.
The mint wasn’t ready or warned, highlighting how unplanned this entire move was.
People died
And in the end nothing happened
All of those goals could be achieved correctly and more effectively.