Prime Minister Narendra Modi government's action to demonetise high value currency was "an important and necessary step" to crack down on "corruption and tax dodging, " State Department Deputy Spokesperson Mark Toner has said.
The action was "designed to target illicit cash proceeds from corruption and tax dodging, " Toner said at the Department's daily briefing on Wednesday in answer to a reporter's question.
The discontinuation of Rs 500 and Rs 1, 000 notes was, "we believe, an important and necessary step to crack down on this - illegal actions or illicit actions, " he said.
Toner did acknowledge that "it was an inconvenience" for Indians and Americans in India requiring "a little bit of adjustment".
He viewed the demonetisation as part of a series of actions taken by the Modi government over the last two years to "reduce black market money".
"I think it also included a four - month amnesty for tax evaders in India, which resulted in, I think, the disclosure or declaration of billions of dollars in hidden assets, " he said.
He was referring to the Modi government's Income Declaration Scheme earlier this year.
It brought out Rs 65, 250 crore (or about $9. 6 billion) held by 64, 275 people, according to Union Finance Minister Arun Jaitley.