On November 8 2016, Narendra Modi, the prime minister of India, announced that the 500-rupee and 1,000-rupee notes (worth about $7.50 and $15 respectively) would be demonetised with immediate effect. This act cancelled 86% of the value of cash in circulation. Moreover, the cancelled notes had to be deposited in banks by December 30 with restrictions on withdrawals. In its boldness, this move by the democratically elected leader of so vast a country makes everything that US President Donald Trump has done so far look trivial. Should one regard it as a decisive action in India’s war against tax evasion, the black economy and pervasive corruption? Or is it a damagingly arbitrary act by an illiberal democrat? Today, it seems a bit of both. In the long run, it depends on what happens next. For a politically and economically stable country suddenly to impose so unexpected and radical demonetisation is unprecedented. Why would any elected government inflict such a shock, particularly since...

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