THE Indian government's move to demonetise the rupee by immediately withdrawing all 500 rupee and 1,000 rupee notes from circulation was widely touted as a way to control the spread of "black" or tax-evaded money in the economy. But while it could have little effect on the pervasive spread of the parallel economy, it could help the government control the deficit in the budget to be presented early next year.

The stated reasons for withdrawing the notes from circulation were either farcical or only partly true. To say that Pakistan was printing high value Indian notes to finance terrorists could hardly be the reason for such a massive exercise. It would have been simpler for banks to check all high denomination notes presented to them and weed out forged ones.

The chaos the government unleashed by withdrawing currency notes worth over four-fifths of the money in circulation last week was unpredictable. It seems unlikely that the prime minister expected what happened. The frustration and anger visible outside bank branches as the common man and common woman waited for hours and days to collect their money from the banks indicated bad planning and governmental arrogance, and portended imminent disaster.