How Much Damage Will India’s Cash Crisis Do to the Economy, and to Modi?

Indians stand in line to withdraw money from an ATM, Hyderabad, India, Nov. 19, 2016 (AP photo by Mahesh Kumar A.).
Indians stand in line to withdraw money from an ATM, Hyderabad, India, Nov. 19, 2016 (AP photo by Mahesh Kumar A.).

On Nov. 8, Indian Prime Minister Narendra Modi announced that 500-rupee and 1,000-rupee notes would be withdrawn from circulation, a move designed to tackle corruption that instead has created chaos and disproportionately affected India’s poor, who depend on the informal economy. In an email interview, Jan Breman, an emeritus professor at the University of Amsterdam, discusses India’s informal economy. WPR: How large is India’s informal economy, how many people participate in it, and how much tax revenue does the government lose from it? Jan Breman: The informal economy in India “employs” close to half a billion men, women and children, […]

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