One-quarter of economy unaccounted for

The withdrawal of 500-rupee and 1,000-rupee notes will be a vast exercise because the banknotes constitute 84 per cent in value of all Indian money in circulation.
The withdrawal of 500-rupee and 1,000-rupee notes will be a vast exercise because the banknotes constitute 84 per cent in value of all Indian money in circulation.PHOTO: AGENCE FRANCE-PRESSE

The withdrawal of 500- and 1,000-rupee banknotes from circulation is a drastic measure to crack down on rampant corruption and counterfeit currency.

About a quarter of the US$2 trillion (S$2.8 trillion) economy is unaccounted for, Bloom- berg reported yesterday.

It will be a vast exercise because the notes constitute 84 per cent in value of all Indian banknotes in circulation.

Mr Narendra Modi came to power in 2014 promising to clean up corruption and curb the generation of "black money", or unaccounted money, that forms part of India's shadow economy.

A version of this article appeared in the print edition of The Straits Times on November 10, 2016, with the headline 'One-quarter of economy unaccounted for'. Print Edition | Subscribe