A partially grounded agent based model on demonetisation outcomes in india.

In November 2016 the Indian government announced a policy of demonetising the ₹500 and ₹1000 currency notes in an attempt to move the economy into using cashless modes for financial transactions. This paper examines the likely impact of demonetisation on such a cash-intensive economy using an Agent-Based Modeling (ABM) approach. The goals were to understand pathways to transition to a cashless money-use behavior and to estimate a population's inconvenience in accessing cash modes. Our model uses empirical evidence from a survey which studied the systemic and behavioral drivers of money-use behavior post-demonetisation. The model is able to illustrate outcomes depicting the pattern of transition to digital payments. We present a framework for optimal remonetisation considering infrastructure density and inconvenience experienced during transition by the population. Simulation analysis found other interesting insights such as service infrastructure acting as a catalyst to noncash transition.