A study of the effect of demonetization on Indian economy

Abstract

The term demonetization is not new to the Indian economy. The most astounding group note at any point printed by the Reserve Bank of India was the Rs 10,000 note in 1938 and again in 1954. In any case, these notes were demonetized in January 1946 and again in January 1978, as indicated by RBI information Bulletin. Since during that period only 5 percent of population in India approached such notes and most banks never had such cash notes, demonetization does not affect the nation on large scale. Nevertheless, with the most recent round of demonetization, the investors without a doubt face up to hardship as more than 85 percent of money available for use has been rendered illicit in one single stroke. The Prime Minister of India Shri Narendra Modi officially announced that from mid night of that day five hundred and one thousand rupees Indian notes would not remain legal tender anymore and gave only three days for their acceptability only at emergency services like hospitals, Airports etc. Since then there has been a no of views by the public over the step taken by the government. Even today people and political parties are criticizing it as a step which has created trouble to the poor instead of it as a great step towards bringing transparency in financial system. As each coin has two sides, similarly demonetization has also both positive and negative aspects. In this paper researcher has tried to cover the aspect of demonetisation in global perspective. Further this paper is an attempt to understand effect of demonetization whether, positive or negative impact on Indian economy.