"India's demonetisation scheme was a unilateral intitative that was planned in
secret - in a back room of Prime Minister Modi's home, in fact - by a small group of
insiders tied-in with the upper echelons of India's government. The strategy was to
instantly nullify all 500 and 1,000 rupees banknotes, the most common currency
denominations in the country, and then eventually replace them with newly designed, more
secure 500 and 2,000 rupee notes. This endeavor instantaneously became policy when the
prime minister announced it via a surprise television address at 10:15 PM on November 8.
Cashless Economy is when the flow of cash within an economy is non-existent and all
transactions have to be through electronic channels such as direct debit, credit and debit
cards, electronic clearing, and payment systems such as Immediate Payment Service (IMPS),
National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) in India
is almost entirely a cash economy. Over 92% of its workers belong to the unorganised
sector and earn in cash. Cash powers the rural economy. Also, 97% of retail transactions
are done in cash, with only 6% of retailers accepting digital Payments. India has 10 lakh
pont-of-sale machines, or compterised cash registers, one-tenth the number in the United
States and China. Some electronic financial service players such as Paytm recorded higher
than usual transactions from existing users. But experts are divided on the switch to
electronic payments among new users in the country's semi-urban and rural areas.
E-commerce transctions completed using card have not been affected by the demonetisation
move (except those where payments are made through the cash-on-delivery mode). But most of
Indian's other transactions take place mostly in cash."