Demonetisation and Black Money-II

On 8-11-2016 PM Modi had announced the withdrawal of Rs. 500 and Rs. 1000 currency notes.
They could only be deposited in Banks and then withdrawals could be made from bank accounts.
This move was stated to control the menace of Black Money in India.

However government had not spelled out the exact mechanism by which  demonetization was going to control black money, maybe it was vague on purpose .

As the government had not declared the express objectives of whole exercise, it was left to the public to come up with reasons on their own.

It was commonly thought at the beginning of exercise that those who are having black money will not be able to deposit them in banks, and the amount of money not coming back would be black money.

However this does not seem to have happened, although Reserve Bank has not declared the final tally but a bulk of money in circulation seems to have come back.

Thus the most direct method of eradicating black money did not work, now we are left with secondary effects of this move.

The secondary effects are based on the premise that the mere deposit of money in accounts does not make it white, and a thorough investigation of deposits will throw up black money.

This is a long drawn exercise and whether it is effective or not will be known in long run only.