Did India’s demonetization trigger the downfall of Pakistan's economy? Was Pakistan's economy dependent on the fake currency printed by them? Raj Replied Thru Quora

 Well, it is surprising but true. And all those who claims it to be a propaganda are a part of propaganda themselves because they don't know the facts.

If you see the history of Forex reserve of Pakistan, it has been constantly following a downslope ever since November 2016 (Demonetization was announced on 08 November 2016) and it is a sharp downslope. And it achieved the historical high in 2016 only due to 6.6 million dollar loan from IMF in September 2016. But then what happened suddenly that from next month onwards ?

If you go by official sources, they would say increased import bills, declining exports, inflation, devaluation of currency and poor condition of their economy have contributed to this mess. But then nothing explains it's sudden and steep downfall despite loan from IMF 2 months ago ?

While nothing of it you can verify officially or that Pakistan would accept it, but it is true that infusing fake currency into India was to destabilize Indian economy at the same time it served them economically too. Because they have to extract the price of printing this currency and the money spent on getting Indian currency printing technology and it's features.

So what was the modus operandi ? Pakistan used to send this fake currency into India, get it exchanged with actual currency. Use that money to fund the terrorists and their operations in India and use rest of the money to buy dollars and then deposit the excess in Forex reserves. So, when they say the Forex reserve of Pakistan depleted due to falling exports (export of fake currency), they mean it.

The other part supporting this fact is the decline in terrorist activities during Demonetization. The terrorist activities that started after the Burhan wani's death came to a halt just after Demonetization because the fake currency was of no use then and they resorted to looting banks. Moreover, have you ever wondered how can a state like Pakistan challenge India where India's defense budget is one sixth of Pakistan's GDP. And during these years USA also stopped it's aid to Pak, so it was double whammy for Pakistan. So, the fake currency infusion in India was a self sustained operation for continuous support to the terrorists and anti-India activities. And what facilitated this thing for years was the 95% similarity between fake currency and actual currency.

So tell me, isn't Demonetization a reason for fall in Forex reserves of Pakistan and their declining economy ? Doesn't this make sense ? Don't the statistics prove this ?

Edit 1: One person has commented that fake currency notes in circulation were only 400 crores and it was revealed by RBI and survey done by PMO. While he is factually correct but I don't know in which year the survey was conducted, because after Demonetization there were still few fake currency notes in circulation. But the picture before 2016 was very bleak. It was estimated that there was about 10–20% fake currency notes (10–20% by value of Indian economy) in circulation back then. The menace was such that even ATMs were disposing fake currency notes. More of these were in Rs 500 and Rs 100 denomination and less in Rs 1000; and this menace was one of the reasons for Demonetization.

Moreover, the fake currency was used to buy dollars, not even in India but in foreign countries as well. It is a matter which has been long brushed under the carpet by RBI.