Institute for Money, Technology & Financial Inclusion

Drawing on survey data from rural Tamil Nadu, the effects of demonetisation are documented. Serious concerns arise with regard to the achievement of its stated goals. The rural economy was adversely affected in terms of employment, daily financial practices, and social network use for over three months. People came to rely more strongly on their networks to sustain their economic and social activities. Demonetisation has probably further marginalised those without support networks. In a context such as India, where state social protection is weak and governmental schemes are notoriously subject to patronage and clientelistic networks, dense networks of supportive relatives, friends and patrons remain key for safeguarding daily life. With cashless policies gaining currency in various parts of the world, we believe our findings have major implications, seriously questioning their merit, especially among the most marginalised segments of the population.