Another reason is that the government wants to coerce people into transferring much of the cash they currently hold into the banking system. This will transform their cash into digital money substitutes.

In the recent past, India’s government has also launched several initiatives aimed at reducing gold purchases by Indian citizens. For one thing, it is asserted that the gold hoards held by citizens are “unproductive” and a sign of India’s backwardness that needs to be eradicated in the name of modernization.