Vol. 7, Issue 6 (2019)
A critical study on effects of demonetization on Indian economy
Author(s): Manisha Ohlan, Ella Rani and CD Autade
Abstract: From slowing down the economic growth in various sectors to giving people nightmares of the long queues and the inability to spend liquid cash freely, the hullabaloo created by demonetization is remembered by one and all on its first anniversary. Demonetization was initiated with a wide array of motives like stripping the Indian economy of its black money, push people to pay taxes for the unaccounted pile of cash, curb terrorism, promote the digital India movement and make India a cashless economy. Demonetization technically is a liquidity shock; a sudden stop in terms of currency availability. It creates a situation where lack of currencies jams consumption, investment, production, employment etc. In this context, the exercise may produce following short term/long term/, consumption/investment, welfare/growth impacts on Indian economy. The intensity of demonetization effects clearly depends upon the duration of the liquidity shocks. Demonetization is a generations’ memorable experience and is going to be one of the economic events of our time. Its impact is felt by every Indian citizen. Demonetization affects the economy through the liquidity side. Its effect will be a telling one because nearly 86% of currency value in circulation was withdrawn without replacing bulk of it. As a result of the withdrawal of Rs 500 and Rs 1000 notes, there occurred huge gap in the currency composition as after Rs 100; Rs 2000 is the only denomination.
Pages: 647-652 | 334 Views 72 Downloads
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How to cite this article:
Manisha Ohlan, Ella Rani, CD Autade. A critical study on effects of demonetization on Indian economy. Int J Chem Stud 2019;7(6):647-652.
