An actor-model based bottom-up simulation — An experiment on Indian demonetisation initiative

Abstract

The dominance of cash-based transactions and relentless growth of a shadow economy triggered a fiscal intervention by the Indian government wherein 86% of the total cash in circulation was pulled out in a sudden announcement on November 8, 2016. This disruptive initiative resulted into prolonged cash shortages, financial inconvenience, and crisis situation to cross-section of population of the country. Overall, the initiative has faced a lot of criticism as being poorly thought through and inadequately planned. We claim that these emerging adverse conditions could have been anticipated well in advance with appropriate experimental setup. We further claim that the efficacy of possible courses of actions for managing critical situations, and probable consequences of the courses of action could have been estimated in a laboratory setting. This paper justifies our claims with an experimental setup relying on what-if analysis using an actor-based bottom up simulation approach.