• Users Online: 132
  • Home
  • Print this page
  • Email this page
Home About us Editorial board Ahead of print Current issue Search Archives Submit article Instructions Subscribe Contacts Login 

 Table of Contents  
Year : 2017  |  Volume : 33  |  Issue : 1  |  Page : 1-4

Demonetization, economic crisis, and social psychiatry: Learning from the past?

Department of Psychiatry, Government Medical College and Hospital, Sector 32, Chandigarh, India

Date of Web Publication13-Feb-2017

Correspondence Address:
Nitin Gupta
Department of Psychiatry Government Medical College and Hospital, Sector 32, Chandigarh
Login to access the Email id

Source of Support: None, Conflict of Interest: None

DOI: 10.4103/0971-9962.200086

Rights and Permissions

How to cite this article:
Gupta N. Demonetization, economic crisis, and social psychiatry: Learning from the past?. Indian J Soc Psychiatry 2017;33:1-4

How to cite this URL:
Gupta N. Demonetization, economic crisis, and social psychiatry: Learning from the past?. Indian J Soc Psychiatry [serial online] 2017 [cited 2020 Jul 11];33:1-4. Available from: http://www.indjsp.org/text.asp?2017/33/1/1/200086

  Disclaimer Top

It will be pertinent to initiate this editorial by clarifying that demonetization, economic impact, economic downfall, economic crisis, and so on, are areas that have multiple and wide-reaching ramifications in various spheres and cut across numerous disciplines and professions. The demonetization issue has been discussed and debated by politicians, economists, sociologists, and policy makers alike. I shall not be touching upon these aspects as they are not only too intricate, but also outside the purview of this editorial. Additionally, the author claims no expertise in the economic aspects of demonetization, and the focus is purely on its mental health aspects.

  Issue at Hand Top

On November 8, 2016, Indian Prime Minister, Shri Narendra Modi, made a sudden announcement about both demonetization and scrapping of high denomination currency, that is, INR 500 and INR 1000 with immediate effect; both these denominations comprised nearly 86% of circulating cash of the Indian economy.[1] Apart from the widespread economic impact and other hardships faced by the people,[1],[2] this decision has received both plaudits and criticism alike at political, economic, and common man level.[1],[3]

An immediate concern, and also a not-so-delayed aftermath of “demonetization” to emerge, was its impact on the healthcare system and concerns related to its potential impact on the mental health of the individuals. Deaths have been linked to demonetization [2] and denial of healthcare services, especially in the private sector, were reported in the initial few weeks when the cash crunch was severe.[1]

The other major concern among mental health professionals was the development of psychological morbidity [4] so much so that it was also a subject of discussion and debate among mental health professionals in the recently held World Congress of Social Psychiatry in New Delhi from 30th November to 4th December, 2016.[5] Additionally, around the same time, and within 3 weeks of the demonetization announcement, a few reports had appeared in various newspapers reporting psychological and behavioral changes (stress, irritability, aggressive behavior, etc.) to the extent of psychological morbidity (anxiety, panic attacks, depression, etc.) primarily due to lack of money or the numerous and frequent changes being made by the government.[6],[7]

However, to the best of my knowledge, there has been no further anecdotal reporting thereafter and additionally no research-based data are available till date. Though, this does make one wonder whether (i) there are no sustained psychological effects of the “demonetization” as had been feared or even initially reported by psychiatrists, or (ii) is it that the initial impact that occurred was conceptually akin to an “acute stress reaction” and the population has by and large adjusted to the initial stressful event? or (iii) more intriguingly, is it that the mental health has not been so adversely affected as the common man has been made to practically undergo/develop continuous and potentially new coping strategies due to a regular stream of changes which have been introduced at periodic intervals over at least 10 weeks postdemonetization?

In my opinion, in all probability, the above-mentioned factors are operating concurrently. However, additionally, there is a fourth potentially significant factor, that is, during the 50-day period following the postdemonetization announcement, a steady slew of currency-related announcements continued to flow in from the RBI, IT officials, and/or the government which kept the public focused on the economic windfall-cum-upheaval, the continuous financial squeeze, trying to make ends meet/run households, doing various financial permutations, and so on, due to which the “problem-solving” coping strategies came to the fore and also kept the person distracted and/or involved so that significant distress and/or dysfunction on a sustained basis was unable to develop.

There is a need to remind the readers of this editorial that these hypotheses are conjectural as there are no data to support them. Nevertheless, it will be premature to dismiss them as there is no evidence on the contrary too.

Additionally, it brings one to the broader issue of how “economic issues” and “economic crises” can impact on mental health. Since demonetization carries such a potential, it will be worthwhile to briefly discuss the interplay of “economic crises” and “mental health.”

  Historical World “Economic Crises” Top

Since the start of the 20th century, the world has witnessed four different major “economic crises.”[8] A brief description of each is provided below to help understand these phenomena.

Great Depression of 1929: This was a worldwide depression that lasted for 10 years. Its kickoff in the U.S. economy was “Black Thursday,” October 24, 1929, when 12.9 million shares of stock were sold in 1 day, which were triple the usual amount. Over the next 4 days, stock prices fell 23% leading to crash of the stock market. It had a worldwide impact leading to a fall in international trade of more than 50%; rapid rise in unemployment across the industrialized world; hyperinflation in a few countries, with profound political consequences; and lastly, it paved the way for the emergence of fascism in Germany and Italy that lead onto WW-II.

Post Communist Depression of 1990s: Gorbachev's attempt to reform the Soviet Union was brought to an abrupt halt by an attempted coup in August 1991. Within a few days, the Soviet Union broke apart as its constituent republics successively declared independence. Each republic had been part of a complex and interlinked trading system in which a single truck emerging from a factory in Kiev might contain components from 10 other republics, with the whole process controlled through a system of central planning that was only possible when the state owned all the factories. Many of the political leaders in the newly independent republics made a seamless transition from party apparatchiks to some form of democracy and capitalism. In some countries, however, the economic changes were profound. Encouraged by western advisors, who were largely motivated by the political imperative of ensuring that communism would be prevented from resurgence, they engaged-to varying degrees across countries-in what was termed “shock therapy,” as part of which state-owned assets were given away to anyone that would take them. Often, this involved the distribution of vouchers to the public, who after 70 years of state socialism had no idea what to do with them. Economic collapse ensued, unemployment rose, and savings were wiped-out by inflation.

South-East Asian Financial Crisis of 1997: The Thai government had tied the Baht to the US Dollar but was no longer able to defend its currency against intense speculative pressure. Careless lending by banks created an unsustainable bubble. Once international investors realized the true state of the economy, the Baht was forced to devalue by 50%. Problems spread rapidly to Thailand's neighbors, leading to mass withdrawal of capital and rapidly rising unemployment across the region.

European (Great) Recession: It began in January 2008, primarily due to nearly 15 years of bad mortgaging deals by banks worldwide. It led onto bankruptcy of the automobile industry (GM, Chrysler), along with housing and real estate problems. This mainly affected the USA, Britain, and Europe (among other parts of the world). The economy of Europe shrank by 4% in 2009, and unemployment reached 10%. Britain, Ireland, Iceland, and Eastern Europe were most affected. The European Union (EU) countries reduced their health budget and introduced structural changes and austerity measures. However, the endpoint has not yet been perceived to be reached in the short term. Significant impact has been seen in the form of increase in national debt levels, decreased Gross Domestic Product (GDP), worsened unemployment rates, challenging of the Basic European Assumptions of welfare state, and principles of solidarity.[9],[10]

  What are the Psychological Impacts of Economic Downturns? Top

Having briefly seen the key events, it will be interesting for the reader to learn that numerous mental health phenomena have been linked with such events, both in short and long term. In fact, there exists a plethora of literature on mental health consequences/mental illnesses and economic downturns in the form of reviews, association led guidance and original research. A brief snapshot of the same is provided, and the interested reader can refer to certain scholarly articles[10–12] for a more in-depth understanding of this aspect.

Overall, numerous negative effects of economic downturns have been recorded in literature. However, it also needs to be borne in mind that certain category of populations tend to be more vulnerable to such negative impacts viz. young people, children and adolescents, those who are least educated, low income individuals/families, those at risk for poverty before downturn, single parent families, ethnic minorities, and migrants.

Unemployment: Unemployment rates tend to increase with economic recessions. This is specifically more in young adults, as they are more prone to experiencing the prolonged negative outcomes up to a decade later due to low wages and difficulties in finding employment.[13]

Conversely, work changes due to economic turndowns can lead onto an increase in the cognitive and emotional demands of work. This, therefore, leads onto absenteeism and withdrawal from the labor market because of stress, anxiety, and depression-related disorders,[12] thereby leading to potential unemployment. It has also been seen that the unemployment rate is a measure of economic well-being of population.

Chances of becoming ill, specifically those who become unemployed are twice as likely to develop a “limiting illness” (i.e., a health condition or disability that limits one's ability to work) and are 60% less likely to recover.[14]

The risk of developing mental illness increases as the duration of unemployment increases,[15],[16] especially among young adult males.[14],[15],[17]

Psychiatric Morbidity: This has been studied through various methods, namely, cross-sectional assessment, longitudinal assessment, and assessment of self-help behaviors (as surrogate markers). Data are mainly available from the following countries-UK, USA, Canada, Spain, Greece, Hong Kong, Australia Ireland, Sweden, Finland, South Korea. Principally a link with increased mental health problems with poorer psychological well-being is reported. The main common mental disorders/problems reported are depression, anxiety, sleep problems, marital dissatisfaction, family conflicts, and cognitive decline.

Alcohol Abuse and Addictive Behaviors: This has been one of the most studied health behaviors as outcomes of macroeconomic fluctuations. Regarding alcohol, its overall consumption is used as proxy for problem drinking. Generally, drinking decreases, most likely due to pricing effects. However, a subsample increase in binge-drinking, harm, and dependence has been reported. Various factors mediating its risk are male gender, duration of unemployment, severity of economic loss, pre-existing individual vulnerability, quality of social and family support, and pre-existing economic disparity. For illicit substances, a consistent pattern has been seen with low SES, but an inconsistent pattern has been observed with periods of economic crises due to flexibility of the illegal market. For nicotine, a consistent increase is seen in both adolescents and adults. Although associations and patterns have been mentioned, it is a simplistic presentation. Overall, a complex relation between substance use patterns and consequence and economic downfall is seen.[10],[12]

Suicide: Numerous studies have shown an increase in suicide rates,[10] especially in the first 5 years following economic recessions.[13] Although the suicide rates can decrease later, they can remain high for up to 16 years after a recession.[16] Additionally, a consistent association of low SES as a risk factor has been reported.[10]

Healthcare Utilization: There is an increase in the inpatient cost per discharge. However, in the USA, the government funded program, Medicare, tends to be affected more than its private counterparts, most likely due changes in utilization patterns and resource use or the increased willingness from providers to treat Medicare patients due to providers facing reduced demand for their services.[13],[18] An increase in the number of admissions among elderly with increased mortality rates is also seen.[19],[20]

  How to Manage/intervene? Top

Although there are numerous recommendations and suggestions available that have been researched in terms of interventions, yet the best way is to prevent the harmful effects of economic crises on mental health. This is best achieved by developing resilience in the population to be able to handle the deleterious effects of such crises, that is, preventive management.[10] Certain common, well-researched, effective, evidence-based preventive strategies are developing and implementing of active labor market programs, community care and support for high-risk groups, reducing stigma of mental illness, shifting focus to early detection, control of alcohol prices and availability, and providing family support programs for low-income groups, women, and children.[10],[12]

However, if a crisis does develop and there are mental health problems that need to be tackled, then measures have to be handled at different levels. Additionally, Martin-Carrasco et al (2016)[10] have strongly suggested that management of mental health cannot be separated from general health and welfare policies as the health sector cannot achieve good mental health alone. Also, they highlight about the need to be aware of the resources available in adjacent systems that can have such an impact on health such as housing, employment, and education.[10]

Keeping this in perspective, management has to be focused at individual/ family (family/parenting support group, job search groups, debt advice), community (tackle the stigma of mental illness, build the case for investing in mental health, ensure universalism in mental health services), and policy (access to child day care, poverty alleviation, debt, youth guarantee, control of alcohol prices and availability, active labor market programmes) levels.

To conclude, I have tried to give a snapshot of how “economic crises” can have an impact on psychological wellbeing of the individual and the society. Additionally, an attempt has been made to provide an understanding about the issue of “demonetization.”

It is mentioned, “lightning never strikes twice in the same place”! The same cannot be said for the phenomena of “demonetization” that has been witnessed in India: initially in January 1978 by the then Prime Minister Shri Morarji Desai, and now in November 2016 by our current Prime Minister, Shri Narendra Modi. Not much psychological turmoil was reported in 1978.[21] Whether the same will hold true for the 2016 move still needs to be observed. The wait is on!


The author wishes to sincerely acknowledge the material inputs, moral support, and invaluable suggestions provided by Professor Debasish Basu (Editor, Indian Journal of Social Psychiatry) during the inception, drafting, and finalization of this editorial.

  References Top

Nagarajan K. India's demonetisation drive is affecting access to medical care. Lancet 2016;389:32-3.  Back to cited text no. 1
www.say2gov.com/single-post/2016/11/23/Demonetisation-A-Complete-Analysis (Last accessed on 5 February 2017).  Back to cited text no. 2
Indian Express (2016). AmartyaSen on demonetisation: Note-ban an undemocratic move akin to unguided missile. http://indianexpress.com/article/india/amartya-sen-on-demonetisation-note-ban-an-undemocratic-move-akin-to-unguided-missile-4495942/ Dated January 28, 2017 (Last accessed on 5 February 2017.  Back to cited text no. 3
Jhai DN. Note ban may kill peace of mind. http://timesofindia.indiatimes.com/city/delhi/Note-ban-may-kill-peace-of-mind/articleshow/55675142.cms TNN, 29 Nov 2016 (Last accessed on 5 February, 2017).  Back to cited text no. 4
Sheriff MK. Has cash crunch hit mental health? Psychiatrists to debate. http://indianexpress.com/article/india/india-news-india/demonetisation-affecting-mental-health-psychiatrists-debate-4400610/ (Last accessed on 5 February, 2017).  Back to cited text no. 5
Juneja H. Cash crunch affecting mental health: Psychiatrists. http://timesofindia.indiatimes.com/city/ludhiana/Cash-crunch-affecting-mental-health-Psychiatrists/articleshow/55520301.cms (Last accessed on 5 February, 2017).  Back to cited text no. 6
Global event, social upheaval can impact mental health, dated 28 November, 2016. http://indiatoday.intoday.in/story/global-event-social-upheaval-can-impact-mental-health/1/822005.html (Last accessed on 5 February, 2017).  Back to cited text no. 7
Stuckler D, Suhrcke M, Basu S, Coutts A, McKee M. What is the evidence of the impact of the economic crisis on mental health. https://ec.europa.eu/health/mental_health/docs/ev_20091210_co11_en.pdf (Last accessed on 5th February 2017)  Back to cited text no. 8
Parmar D, Stavropoulou C, loannidis J PA. Health outcomes during the 2008 financial crisis in Europe: systematic literature review. BMJ 2016;354:i4588.  Back to cited text no. 9
Martin-Carrasco M, Evans-Lacko S, Dom S, Christodoulou NG, Samochowiec J, Gonzalez-Fraile E, et al. EPA guidance on mental health and economic crises in Europe. Eur Arch Psychiatry Clin Neurosci 2016;266:89-124.  Back to cited text no. 10
Wahlbeck K, McDaid D. Actions to alleviate the mental health impact of the economic crisis. World Psychiatry 2012;11:139-45.  Back to cited text no. 11
World Health OrganizationImpact of economic crises on mental health. Copenhagen, Denmark: World Health Organization. 2011;1-22.  Back to cited text no. 12
Cheung S, Marriott B. Impact of an economic downturn on addiction and mental health service utilization: A review of the literature. Alberta Addiction and Mental Health Research Partnership Program, Alberta Health Services, October 2015   Back to cited text no. 13
World Health Organization Impact of economic crises on mental health. Copenhagen, Denmark: WHO; 2007  Back to cited text no. 14
Marmot SM, Bloomer E, Goldblatt P. The role of social determinants in the tackling health objectives in a context of economic crisis. Pub Health Rev 2013;35:1-24.  Back to cited text no. 15
Modrek S, Stuckler D, McKee M, Cullen MR, Basu S. A review of health consequences of recessions internationally and a synthesis of the US response during the Great Recession. Pub Health Rev 2013;35:1-33.  Back to cited text no. 16
Bartley M, Slacker A, Clarke P. Employment status, employment conditions, and limiting illness: prospective evidence from the British household panel survey 1991–2001. J Epidemiol Comm Health 2003;58:501-6.  Back to cited text no. 17
Maeda JLK, Henke RM, Marder WD, Karaca Z, Friedman BS, Wong HSW. Association between the unemployment rate and inpatient cost per discharge by payer in the United States, 2005–2010. Bio Med Central Health Serv Res 2014;14:1-8.  Back to cited text no. 18
De Vogli R. The financial crisis, health, and health inequities in Europe: the need for regulations, redistribution and social protection. Int J Equity Health 2014;13:58-http://dx.doi.org/10.1186/s12939-014-0058-6.  Back to cited text no. 19
McInerney M, Mellor JM. Recessions and seniors' health, health behaviors, and healthcare use: analysis of the Medicare Current Beneficiary Survey. J Health Econom 2012;31:744-51.  Back to cited text no. 20
Yadav Y. Demonetisation: From Morarji to Modi, it is politics and volume that matters the most. First Post November 22, 2016. http://www. firstpost.com/india/demonetisation-from-morarji-to-modi-it-is-politics-and-volume-that-matters-the-most-3118112.html (Last accessed on 5 Feb 2017).  Back to cited text no. 21

This article has been cited by
1 The effect of government regulations on continuance intention of in-store proximity mobile payment services
Surabhi Verma,Sushil S. Chaurasia,Som Sekhar Bhattacharyya
International Journal of Bank Marketing. 2019;
[Pubmed] | [DOI]
2 The enigma of demonetization and the unexplored consequences
Arun Enara,MaheshR Gowda
Indian Journal of Psychiatry. 2018; 60(1): 6
[Pubmed] | [DOI]


Similar in PUBMED
   Search Pubmed for
   Search in Google Scholar for
Access Statistics
Email Alert *
Add to My List *
* Registration required (free)

  In this article
Issue at Hand
What are the Psy...
How to Manage/in...
Historical World...

 Article Access Statistics
    PDF Downloaded533    
    Comments [Add]    
    Cited by others 2    

Recommend this journal