The Narendra Modi led NDA government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.
However, the sudden nature of the announcement and the prolonged cash shortages in the weeks that followed—created significant disruption throughout the economy, threatening economic output.
Interestingly, some notable international figures praised/criticised the bold step taken by PM Modi.
1. Nobel Prize winner Richard Thaler
When India announced demonetisation in November 2016, Nobel Prize winner Richard Thaler described it as a "policy I have long supported".
Richard Thaler, a Professor of Economics and Behavorial Science at the University of Chicago, has won the Nobel Prize in Economic Sciences.
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Thaler, in a tweet on November 8, 2016 (along with a link to a news article about notes ban) said, "This is a policy I have long supported. First step toward cashless and good start on reducing corruption."
However, soon after responding to comments that Rs 2,000 currency notes are to be introduced, Professor tweeted, "really? Damn".
2. World Bank CEO Kristalina Georgieva
The World Bank CEO Kristalina Georgieva had lauded PM Narendra Modi’s demonetisation move.
“PM Modi’s decision to ban high-value banknotes as part of efforts to stamp out corruption will have a profound and positive impact on India’s economy,” she told Hindustan Times. “What India has done will be studied (by other countries). There hasn’t been such demonetisation in a country so big,”
3. Economist Kenneth Rogoff
India’s decision to withdraw 86 percent of its currency in circulation a year ago could have potentially led to a significant contraction in economic activity, particularly in the informal sector. As it turned out, Indians averted the impact of demonetisation in creative ways and the damage was not as much as was feared, said Harvard economist Kenneth Rogoff in an interview with BloombergQuint.
“...You would expect economic activity, particularly in the informal economy to contract a lot. But the Indian people seem to have been incredibly creative,” said Rogoff. “It is really a surprise that the damage was not much more,” Rogoff added.
4. Economist Gita Gopinath
Harvard professor and economist Gita Gopinath had said, India's current policy of replacing Rs 1,000 notes with Rs 2,000 notes undermines the long-term effectiveness of demonetisation.
In her blog on Project Syndicate, Gopinath, she had argued in favour of a gradual implementation. She had said that a permanent withdrawal of large notes would've served PM Modi's cause better.
5. Larry Summers
Former U.S. Treasury Secretary Larry Summers had expressed doubts that notes ban will have any lasting effect in curbing black money or corruption.