In theory , the demonetisation was done to fight against ' black money ', by forcing people who had hoarded cash to declare it by putting it into their bank accounts now that it could not be used as legal tender . For all I know , it may not even be constitutional to break the promise on the notes , but we . The issue is , because of inflation among other factors , the top two high value notes that were declared no longer legal tender , 500 and 1000 , are very , very commonly used converted to US currency , that is about $ 15 and $ 30 respectively . Obviously purchasing power is different , so it isn ' t an accurate measure , but still , it gives some idea . This meant that , essentially overnight , about 6070 % of the cash money in the country became worthless , and had to be exchanged . And India isn ' t a cashless economy , far from it overwhelmingly , transactions are still carried out in cash , so trade has slowed down significantly . EDIT It doesn ' t help that exchanging cash in banks is limited to 4000 per person per day , and because there aren ' t enough 100 notes to give everyone , and the new 500 and 2000 yes , a new higher value note , go figure are not calibrated for ATMs and are rare anyway despite government presses working overtime , a lot of people , even after standing in line for hours , don ' t get money . Apparently people have died in the line as well , as well as people who have gone broke because their money suddenly became paper and a bank was too far have gone and killed themselves , but this I ' m not sure about . It doesn ' t help that Modi devotees will call you a ' black money holder ' if you complain about this , on top of being called an ' antinational ', a traitor , and a Pakistani . WhatsApp has been significantly active regarding how Modiji had to demonetise the notes to combat some Pakistani conspiracy , and how all patriotic Indians should tolerate 10 days of inconvenience for a brighter future . Edit This is apart from how the younger generation is selfish because they can line up for participating in reality shows and going for concerts , but cannot stand in line for exchanging money for their country . The bigger issue is that most of the black money that corrupt people have is not in the form of cash , but rather in the form of gold or property or other means . The popular narrative was that demonetisation was a ' surgical strike ' on corruption , but the SC called it , more accurately , IMO , a ' carpet bombing ', hurting the innocent far more than the guilty . rindia is fairly split on this , so asking there might get you a different response . Also , I may have made errors , but it is 2 . 30 am , please forgive .