In conjunction with the GST, it may result in a steadily declining role of cash, encourage credit and digital currency transactions and a rolling back of the black economy. This measure will, in one stroke, essentially kill the black economy, which is conservatively estimated at more than a fifth (20%) of the formal economy and up to 45% by some observers. Ostentatious consumption, incurred from ill-gotten and black economy activities, will also be curbed, thereby encouraging savings and capital formation. Thus, both the stock and flow of black money will be controlled. New Rs 500 and Rs 2000 notes will likely embody advanced technical features that will make counterfeiting far more difficult.

Source: Hindustan Times November 13, 2016 09:48 UTC