In a dramatic move to address rampant corruption and black money in the Indian economy, Prime Minister Narendra Modi announced the demonetization of the ₹500 and ₹1000 banknotes on live television. The initiative aimed to tackle tax evasion and reduce the circulation of counterfeit currency, which was believed to be funding illegal activities. The announcement was initially met with shock, as the high-denomination notes constituted a significant portion of the cash in circulation at the time. Modi stated that this bold step would lead to a cleaner economy and greater transparency in financial transactions.

Following the announcement, the Reserve Bank of India invalidated the aforementioned banknotes, giving citizens a limited window to deposit them into their bank accounts or exchange them for new ₹2000 or ₹500 notes. This transition period triggered a massive public response, leading to long lines at banks and ATMs as people rushed to convert their old notes. The sudden change created turmoil in the daily lives of millions, particularly affecting those reliant on cash for everyday transactions. The government implemented several measures to ease the transition, such as raising withdrawal limits, yet chaos erupted in multiple urban and rural areas due to cash shortages.

Moreover, the demonetization policy received mixed reactions from various segments of society. While some praised Modi's intent to eradicate black money, critics voiced concerns about the lack of preparation and the immediate adverse effects on small businesses and the informal economy. The policy's long-term effects have been debated fiercely in the political arena, with its supporters highlighting increased digital payments and formal employment, while opponents continue to argue about its impact on economic growth and employment.