India’s Transformation: From Rupee to Digital Rupee, A QR Code Revolution

A real bombshell…

A hammer blow for millions of holders of these banknotes, especially those who had them stashed under their pillows…

The Reserve Bank of India stipulated that the demonetized notes could be deposited in banks within 50 days, i.e. until December 30, 2016. The notes could be exchanged at face value, but the limit was 4,000 rupees per person from November 8 to 13, then 4,500 rupees from November 14 to 17, reduced to 2,000 rupees from November 18 to 25. Finally, the exchange of notes was completely stopped on November 25, even though the government had previously declared that the exchange volume would be increased after that date.

This left very little time to bring them back to the bank… declare income… in short, to switch everything into “transparency”… a word that, of course, struggles to exist in India. India, queen of corruption, bargaining, and “benevolent scams,” finds it difficult to embrace such a concept of transparency.

Reducing Black Money: An Unrealized Goal

The goal of Narendra Modi was indeed to reduce the underground economy and, in doing so, curb illegal activities and terrorism.

The result did not live up to expectations, despite such a radical measure. The government had estimated that 5 trillion rupees, or about 20% of the demonetized notes, would be permanently removed from circulation. But according to a 2018 Reserve Bank of India report, 99.3% of the demonetized notes were returned to banks—that’s 15.3 trillion rupees out of the 15.41 trillion withdrawn. The unreturned notes were valued at just 107.2 billion rupees. Analysts concluded that this extraordinary effort had failed to eliminate black money from the economy.

Worse still, it was estimated that about 1.5 million jobs were lost due to stock market declines (over 6% the day after the announcement), leading to a reduction in industrial output and GDP growth.

And what about the mess (to put it mildly) this all caused?

A daily withdrawal limit at ATMs was imposed, ranging from 2,000 rupees per day until November 14, to 2,500 per day until December 31. This was then raised to 4,500 per day from January 1, and to 10,000 per day starting January 16, 2017. From November 17, families were allowed to withdraw 250,000 rupees for wedding expenses. Farmers were authorized to withdraw 25,000 rupees per week against crop loans.

International airports also facilitated currency exchange for foreign tourists and outbound travelers, but only up to 5,000 rupees per person (barely €60…).

Fuel stations, public hospitals, railway and airline counters, dairies, government ration shops, and crematoriums were allowed to accept demonetized notes until December 2, 2016.

I was organizing a trip to Bodhgaya in late December 2016–early January 2017, and like everyone else, I joined the endless queues at ATMs… every day, since we couldn’t withdraw more than 4,500 rupees per card per day! That’s about €50! You can’t get far with that! I had to manage with several bank cards just to withdraw enough to pay for hotels, restaurants, and transportation… because in India, of course, it’s still often difficult to make a bank transfer or pay by card.

For me, it was “only” 18 days of chaos, but for the Indian people, it was months of hardship! From November 10 to 13, cash withdrawals were limited to 10,000 rupees per day and 20,000 per week per account. This was later raised to 24,000 per week starting November 14, 2016. Restrictions on withdrawals from current accounts/overdrafts were removed later.

On February 20, 2017, the RBI increased the savings account withdrawal limit to 50,000 rupees (up from 24,000), and by March 13, 2017, it finally removed all withdrawal limits.

During this period, more than 800,000 truck drivers were affected by the cash shortage, with over 400,000 trucks stuck on India’s main highways and endless queues at tolls that no longer accepted demonetized notes.

And not to mention the many ATMs constantly empty, looted by desperate citizens… queues so long that people literally died in them, like Vinod Pandey, a 69-year-old retired government employee, who collapsed outside a Union Bank of India branch in Sagar.

A Digital Turn Driving Financial Inclusion

By 2016, we could already see blue-and-white PAY TM stickers in many shops and stalls.

The push toward digital payments was one of the declared intentions of demonetization.

In November and December 2016, digital payments surged dramatically because of the cash shortage. Debit card transactions at points of sale doubled compared to pre-demonetization trends.

That same year, the UPI (Unified Payments Interface) was launched, India’s real-time payment system allowing users to transfer money directly from one bank account to another—in other words, instant bank transfers.

Today, in 2023, no fewer than 260 million people in India use this system out of a population of 1.4 billion.

The pandemic accelerated this shift: in 2020, over 48 billion digital transactions were made! With mobile plans available at extremely low prices, the majority of the population now owns a phone. Almost everything is paid via mobile.

This financial inclusion—giving underbanked and unbanked people access to basic financial services—is now widespread.

Digital India, Boosted by the Pandemic

Indians have been moving toward digital financial services for quite some time. This is partly due to growing wealth, better internet, and more affordable technology—and because Prime Minister Narendra Modi has placed digital transformation at the core of government policy.

Launched in 2015, “Digital India” aims for faster, more inclusive economic growth by pushing government and banking services online, while bringing the country’s masses of poor, especially in rural areas, into the formal economy through investments in technology.

But it was the pandemic that accelerated the shift. Lockdowns forced millions to buy groceries and medicines through mobile apps, since they couldn’t leave their homes. ATMs ran out of cash—and in any case, people no longer wanted to handle physical money for fear of catching the virus.

And What About Us?

Ah yes… us. Let’s be honest: we may be living our final hours unless there’s a sudden awakening. The world is changing—fast. For me, each trip is an opportunity to witness firsthand the impact of an ever more present, pressing QR code revolution. India is plunging headfirst, without hesitation, into a direction that leaves us behind. While sacred cows still reign supreme, while traffic laws are orchestrated in a symphony of honking horns, while trash still covers the streets without shame or guilt—Digital India will pin us to the ground. That much is clear.

The Indian is, by nature, adaptable. The harshness of life from childhood makes one always ready to seize what must be seized. Every opportunity is unavoidable. The mind stays alert, ready to step into the unknown, to achieve the unexpected and the impossible.

We, on the other hand, have been raised in a cocoon—in the “Care Bears country.” Everything is framed, regulated, cushioned. The slightest ripple becomes ten therapy sessions. The social mold becomes the shell. Looking beyond feels impossible. The mind thus takes root in this manufactured comfort, exhausting our capacity to adapt.

India has bet on digitalization, and the fact is, it’s entering the league of leaders. The skeptics and complainers will say: “Yes, but look—the roads are bad, the houses are crumbling, the organization is a mess…”

I disagree. The most important thing is what moves fast. And what moves fast is digital. That’s exactly where India is building its foundation. From there, it will expand investments and development.

On my most recent trip in late December 2022, I witnessed India launching the next stage: the physical revolution.

That will be the subject of a new article on this blog. Roads are carving their way, reshaping the countryside, cutting through villages, flying over cities… This material transformation will progress quickly, in my view, in two phases: an immediate, rapid phase to relieve congestion and connect regions; and then a revolution layered on top of that—perhaps solar roads recharging vehicles and rickshaws?

Everywhere now, absolutely everywhere, the Digital India 2015 billboards have been replaced with “ONE EARTH – ONE FAMILY – ONE FUTURE”, in preparation for the upcoming G20.

So what is Narendra Modi’s vision through this new lens?

With Incredible India, everything is possible. Absolutely everything.

If you join us on our journeys, you will understand all the layers of this last sentence.

Until then—take care. And remember: don’t take anything for granted, because the world is changing, and so are the balances of the world.