Financial emergency due to demonetisation-A case study of Hyderabad town

Abstract

The Government of India announced that the Rs 500 and Rs. 1000 denominated currency notes will cease to be legal tender. The present demonetization of currency decision has taken after a long period of 38 years by the Government of India on November 2016. Earlier demonetization was implemented in 1978 by withdrawing Rs 1000, Rs 5000, and Rs 10, 000 notes that were in circulation. The move was targeted towards tackling black money, corruption and terrorism. Through this study an attempt is made to analyze the operational measures announced by the Government of India to know the pros and cons of demonetization and to know the views of various categories of people on demonetization of high denominational notes in India. The long, anxious, and frustrating wait by people outside banks and ATMs across the country since the morning of 9th November, 2016 is an inevitable consequence of the decision to demonetize notes of Rs.500 and Rs.1000. When 86% of the value of notes in circulation turns suddenly invalid, as it did with Prime Minister Shree Narendra Modi's “Surgical Strike announced on 8th November, 2016, a certain degree of disruption and pain is unavoidable. But the question is whether this chaos could have been anticipated and managed better than it has been. Replacement of the demonetized notes is a time consuming exercise that requires planning of the highest order. The experience of the last few months’ shows that preparation was lacking and the transition could have been handled much better.