Impact of Demonetization on Indian Economy

This paper analyses the short term costs and medium term benefits of demonetization and its Impact on the growth of various sectors of an economy where significant cash transactions are involved. It is evident from observed data that the impact of demonetization on Gross Value Added growth was modest. Although the Gross Value Added contracted marginally, it is projected to be positive in coming years. In the beginning it negatively impacted the segments of manufacturing and service sector showing the downward movement in various markets such as automobiles, consumer, real estate etc. Later with the remonetization and lower lending rates the growth of an economy has been recovering fast through increase in private consumption, disposable income and affordable loan. With digitization economy is moving towards cashless society and will bring more transparency in the system reducing tax evasion thereby curbing the use of black money for illegal activities and terror funding.