rnin    o io    onomi ss es         21.11
        (iii) Checking terrorism (as they use high                            far away from this objective: the Watal
                denomination notes); and                                      Committee has recently estimated that
         (iv) Preventing accumulation of black money.                         cash accounts for about 78 per cent of
           This action followed a series of earlier efforts                   all consumer payments. According to
     to curb such illicit activities: the creation of the                     Pricewaterhouse Coopers (2015) India has
     Special Investigative Team (SIT) in 2014, the                            a very high predominance of consumer
     Black Money and Imposition of Tax Act 2015,                              transactions carried out in cash relative
     Benami Transactions Act 2016, the information                            to other countries (accounting for 68 per
     exchange agreement with Switzerland, changes                             cent of total transactions by value and 98
     in the tax treaties with Mauritius, Cyprus and                           per cent by volume).
     Singapore, and the Income Disclosure Scheme.                                People prefer cash transaction due to
     This was not an unprecedented action as there                            many reasons. It is convenient, accepted
     were two previous instances of it—in 1946 and                            everywhere, its use is costless for ordinary
     1978, the latter6 not having any significant effect                      people (though not of course for society
     on cash.                                                                 at large), is anonymous, helps preserve
           There have been reports of job losses, declines                    privacy, which is not bad till it is not illicit
     in farm incomes, and social disruption, especially                       or designed to evade tax. Digitalisation
     in the informal, cash-intensive parts of the                             can broadly impact the three sections of
     economy. However, a systematic analysis is not                           society—the poor, who are largely outside
     possible yet due to paucity of data. The benefits of                     the digital economy; the less affluent, who
     demonetisation can be only felt in coming years—                         are becoming part of the digital economy
     the move was more aimed at long-term goals than                          having acquired Jan-Dhan accounts and
     short-term. We may have a brief review about the                         RuPay cards; and the affluent, who are
     impact of demonetisation on the economy and                              fully digitally integrated via credit cards.
     behavioural aspects in the following way.                           (b) Real estate: This sector could have
     Long-term benefits: It is too early to quantify the                      profound impact. In the past, much of the
     direction and magnitude of long-term changes.                            black money accumulated was ultimately
     It will take several years to see the impact of                          used to evade taxes on property sales. A
     demonetisation on illicit transactions, on black                         reduction in real estate prices is desirable
     money, and on financial savings. But there are                           as it will lead to affordable housing for
     some signs pointing to change.                                           the middle class, and facilitate labour
          (a) Digitalisation:           One         intermediate              mobility across India currently impeded
                objective of demonetisation is to create                      by high and unaffordable rents.
                a less-cash or cash-lite economy. This will         Short-term impact: Demonetisation will impose
                not only channelise more saving into                short-term costs on the economy, which remain
                the financial system but it will improve            difficult to measure by now due to lack of the
                tax compliance also. Currently, India is            right data set. As the process has created a large
        6.   In 1970, a Committee headed by former Chief Justice    structural shock, the underlying behavioural
             K.N. Wanchoo, in its interim report, recommended       parameters of the past will be imperfect indicators
             demonetisation of the 10, 100, and higher denomination of future behaviour and hence the outcomes.
             notes to combat the scourge of black money. These
             denominations accounted for 86.6 percent of the then   Although a framework of the short-term impact
             money stock.                                           may be outlined: