Modi's Demonetization Called "Colossal Failure That Ruined Economy" As India GDP Growth Slumps To 2-Year Lows

Tyler Durden's picture

India's embattled Prime Minister Narendra Modi faced a double whammy of abuse this week as his nation's economic growth collapsed to its weakest since Q1 2014 and India's Central Bank released a report on Modi's extraordinary "demonitization" plan last year showing that 99 per cent of the high denomination banknotes cancelled last year were deposited or exchanged for new currency, crushing Modi's lie that his contentious 'war on cash' would wipe out huge amounts of so-called 'black money'.

When Modi announced in November that Rs1,000 ($16) and Rs500 notes would no longer be legal tender, he suggested that corrupt officials, businessmen and criminals — popularly believed to hoard large amounts of illicit cash — would be stuck with “worthless pieces of paper”. At the time, government officials had suggested that as much as one-third of India’s outstanding currency would be purged from the economy - as the wealthy abandoned or destroyed it, rather than admit to their hoardings - reducing central bank liabilities and creating a government windfall.

Since he unleashed his cunning plan, India's GDP growth has slowed dramatically.

After India's Composite PMI collapsed, India's Q2 GDP growth slowed to 5.7% - its weakest since Q2 2014...


And now, as The FT reports, the Reserve Bank of India’s annual report on Wednesday suggested that most holders of the old currency managed to dispose of it, estimating that banned notes worth Rs15.28tn ($239bn) were returned to the bank. That amounts to 99 per cent of the Rs15.44tn of the old high-value notes that were in circulation when Mr Modi made his announcement, according to the finance ministry.

The government’s critics were quick to seize on the RBI’s announcement as evidence of the policy’s failure.

“99 per cent notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” former finance minister P Chidambaram tweeted.


Rahul Gandhi, de facto leader of the opposition Congress party, tweeted: “A colossal failure which cost innocent lives and ruined the economy. Will the PM own up?”

The bank’s figures are a political embarrassment to Mr Modi, who had appealed to the nation to endure the disruption and hardship to punish the rich and corrupt, and deprive them of their ill-gotten gains.

Many lower income Indians hard hit hard by cash shortages supported the demonetisation policy because they believed the rich were suffering more.

It appears they were suckered!

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Kamehameha's picture

mission accomplished.

Manthong's picture


Surprise Surprise Surprise

Nothing instills confidence in government and leaders like when they change the rules of the game and pull the rug out from under you in a blindside move.

Modi should be boiled in oil along with his bankers.

tmosley's picture

He ought to be executed.

But the shit people won't do it. No accounting for them. Guess they think their getting stepped on is punishment enough for their oppressors.

07564111's picture

But the shit people won't do it.


kinda like pindos yes ? .. all guns and no balls ;) ... or no guns and no balls like tmosley :D

philipat's picture

Unfortunately, it won't make any difference. "Modern Western Liberal Democracies" such as Australia will still double down on their "Wars on Cash" and ignore the Indian experience because their objectives are other than as stated. The real goal is to allow confiscation of your money via the application of negative interests rates with no escape routes. Other than PM's, which, of course, explains the war on them also...Get in line plebs, just STFU and BOHICA......

auricle's picture

I would really love to know if Goldman Sachs gave Modi this shit advice. I really can't believe Modi could come up with such a plan to fuck his countrymen over.  

Actually, I'm surprised the damage wasn't far worse. 

philipat's picture

Probably the BIS; but it's all the same thing isn't it? It seems clear that an experiment was conducted in an economy (India) with a very high dependence on cash to take a "Dry run" as it were. As I said, now that it failed, it won't make any difference and the failure will be ignored.

monk27's picture

Stupid is as stupid does, as they used to say...

The Ingenious Gentleman's picture

That was no "dry run". It was the real deal.

Mustafa Kemal's picture

"I would really love to know if Goldman Sachs gave Modi this shit advice. "

W. Engdahl disusses the CIA/Gates/USAID players involved in this:


Arrow4Truth's picture

Indians (not the woo-woo kind) are not his countrymen. He sold his soul, so he is of the malevolent kind. One could not arbitrarily disrupt the monetary system of the entire nation if he was in possession of any emotion e.g., empathy, or conscience. It's fucking eee-vil. But it appears that there is no line in the sand.

PGR88's picture

The US Agency for International Development (USAID) came up with this scheme.

thedespised's picture

i'm surprised people are still blind to the new world order agenda, like the political theatre or voting matters. lol.  

yarpos's picture

arent we always sneering at fiat currencies?   suddenly they are really important

philipat's picture

That's a very obtuse re-statement of what I didn't say? Fiat currencies are low on my list of investment priorities for sure but in the very short-term if you have funds in a Bank and need to get them out in a hurry, cash works just fine. The alternative is no way out and negative interest rates. Which do you prefer?

yarpos's picture

arent we always sneering at fiat currencies?   suddenly they are really important

Pool Shark's picture

Not me,
My mantra for several years has been:
Cash, Bonds, Gold

FRN's are actually in very short supply.

Half of the American population can't even come up with $400 for an "emergency".

In the next crisis (which will be deflationary), cash will be king,... at least for a while...

BeanusCountus's picture

That's what elections are for. We will see if he get's justice or not.

Arrow4Truth's picture

There you go again with the "that's what elections are for" bullshit. What is your point? By not re-electing him, justice will be served? Wow! Come on Beanus, you're sounding like you've had a bit too much Kool-aid.

BeanusCountus's picture

That's what elections are for. We will see if he get's justice or not.

Anunnaki's picture

Yeah but what is the alternative? Go back to voting Congress.

Like expecting the Deplorables to go back to voting Democrat.

World Wide Left is dead

Arrow4Truth's picture

Horseshit. Elections are for nothing more than providing a false sense of security for the slave consenters for 2 - 4 years. "Oh, this one will surely be an improvement!" Nope. The fucking system is too corrupt for any new blood to make a difference... and you're stuck with the same old shit for another term. Problem is, this shit will continue as long as people continue to believe that by taking ownership of the title "voter", that they are "doing the right thing"... making their contribution, yet bitch about how corrupt the "system" is, and never consider that by their actions they support it. Goddamn. Prime example of how stupid people have become. Wake... the fuck... up. (sigh) Forgive the rant... ommmmmmmm. 

thedespised's picture

forgiven, it's hard to have common sense in the land of lost children.  it's forgivable to freak out from time to time, since people are very very dumb.

Fred Hayek's picture

His bankers?

You've reversed the actual status of owner and little pet.

Their little Modi.

SoDamnMad's picture

Bankers took it in against rules of the government by simply skimming off a percentage for themselves.  BallyWall at it's finest. It's a big club and you ain't in it.

Dubaibanker's picture

Myself and Jayant Mehta had predicted this, that demonetization will be an epic failure. We are barely 10 months and things are in TERRIBLE shape!

One of my comments is here from Dec 10, 2016:

Indians remain one of the largest passive sufferering people in the world. Citizens of other countries have rioted  or changed Govts for much less.

It is because of fear of the educated and the powerful over the mass of illiterates, lower castes etc.

Indian politiicians love to continue the divide and rule policies of the Mughals and British runing India for over 800 years.

Over 50% of all elected Members of Parliament are criminals.

GST is another unfolding disaster implemented since July 2017.

Worse is yet to come but hiding facts is an art you can learn from the Indians!

any_mouse's picture

Reminds me of Dot Indian Tech managers.

They do not want to hear bad news.

HardAssets's picture

Reminds me of the colonial troops who proudly wore the uniforms of their people's foreign oppressors.

Mr.BlingBling's picture

Failure? Not at all. The people calling the shots think that this test program worked quite well. Phase II will be coming soon to a theatre (of financial war) near you soon!

The Wizard's picture

Deutsche Bank, with its derivative exposure, would definitely lead to a systemic failure.

Is this phase II? Rules for mega bank failure are finalized. Get ready.

Handful of Dust's picture

kaine and Soros Jr are calling the Nobel Committee to award Modi the Prize in Economics!


This has Greenspan and the Bernanke fuming.

MegaOlmecanManiac's picture

It's just more 3D chess, people.

It's just that the pieces are street sweepers, floating corpses, and poo flinging monkeys.

saldulilem's picture

Political embarrassment? Time will tell, but there was a theory that the scheme was designed to starve opposition parties of cash, resulting in his party scoring state election victories.

Ben A Drill's picture

This has Gold looking better and better.

el buitre's picture

That's what you get for fucking a stranger in the ass, Larry.

any_mouse's picture

And fucking someone you know in the ass is better?

assistedliving's picture

last vestiges of a Socialist experiment....oh, wait

Millennial Permabear's picture

but, but, Modi had to fight the corruption. Whether the medium of exchange is fiat, silver, gold, bitcoin, or campbell`s soup, always blame the hammer not the carpenter.

The Cooler King's picture

So many monkeys, so few footballs.

BitchesBetterRecognize's picture

Modi should be kicked out of BRICS - same goes for that fucking Brazilian Goldman Sachs Temer.  

Latitude25's picture

Indian public reaction = buy more gold than ever.  I laughed my ass off when Modi demonetized.

sdot54's picture

First they agreed to be hotwired with IUD's for the Aadhhar. Apparently Modi convinced them Americans loved their S.S. numbers. Then they bought the idea of getting rid of cash for the good of India. They have to help fight those criminals (A CRAY dark economy in India does exist) Next up on the docket they are introducing a shit load of taxes in the coming years. I've heard some 40 desperate shakedowns...fuck off. Local Indians will be hard pressed 2 speak out or protest, because Modi can press a button and zero their accounts. What's that phrase? "Hi, we're from the government and we're here to help."

East Indian's picture

Ken Rogoff. IMF. 

Indians are the guinea pigs. 

The results are disastrous. Even for the cabal. So, this idiotic experiment will not be repeated in other countries. Instead they will resort to the salami tactics and slowly eliminate the physical cash. 

Poor Modi. He came to power on an anti- America mindset (he was once denied visa by the American Embassy). But the Gujaratis in America (Patels are Gujaratis, from his home state Gujarat) fooled him and he has totally gone with the debt-as-money gang; his commitment to BRIC is questionable. 

He should kick those fellows out. But what do I know?

flapdoodle's picture

Modi is a (((Deep State))) puppet and clearly a psychopath - he ignores, or actually enjoys, the pain he has inflicted on millions of Indians as he sees their lifes effort disappear in a bonfire of US$16 bills... what a creep, and what a jackass.

...not to mention his willingness to start a war with China to help out the US/Israeli Deep State Department.

napper's picture

The recent border drama might have been a calculated move by Modi to divert Indians' ire at his failed economic policies. China helped Modi with some strong words and military exercises. India's strategic interests lie in being a constructive member of the SCO and BRICS. There will be well-funded attempts by the US (or the London interests) to draw India away, and even use it as sort of cannon fodder in a war against China on behalf of the West.