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Demonetization and under-reporting of economic activity: Evidence from real estate

Author

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  • Anagol, Santosh
  • Balasubramaniam, Vimal
  • Ramadorai, Tarun
  • Uettwiller, Antoine

Abstract

A major goal of India’s 2016 demonetization was to curb tax evasion by reducing the use of cash in under-reported economic activity. We test whether the policy reduced under-reporting in real estate transactions — a market long suspected of widespread cash use and evasion. We find no change in aggregate under-reporting, but moderate declines among the 30% of transactions between individual buyers and sellers, relative to the 70% where developers are sellers. We also find evidence of under-reporting declines amongst smaller developers and regions where under-reporting was more common pre-demonetization. Our results, from a major Indian city, highlight both the limits of cash-based enforcement and the heterogeneous effects of demonetization style policies.

Suggested Citation

  • Anagol, Santosh & Balasubramaniam, Vimal & Ramadorai, Tarun & Uettwiller, Antoine, 2026. "Demonetization and under-reporting of economic activity: Evidence from real estate," Journal of Development Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:deveco:v:182:y:2026:i:c:s0304387826000660
    DOI: 10.1016/j.jdeveco.2026.103783
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