Demonetisation -Problems and the Way Forward (original) (raw)

DEMONETISATION OF CURRENCY IN INDIA -PROBLEMS AND PROSPECTS

the department of economics, thiruvalluvar University, 2018

Demonetisation of high denomination of Indian Rupees is apparently a welcome march to the regular Indian. Generally speaking ‘Demonetisation’ is the act of stripping a currency unit of its status as legal tender. Demonetisation is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit is called as Demonetisation of money. It is nothing but, withdrawal of a particular form of currency from circulation. The incidence of fake Indian currency notes in higher denomination has increased. Hence, monetization comes with immense benefit but Governments should also consider about informal sector where most of the payment is in cash only. Consequently this move is good but Utilitarian Principle would have made it further better. The bold step that has been taken to fight the problem of black money, counterfeit currency, and corruption will also speed up the move to a cashless economy. While the country still debates on the impact of this bold and historic step. Recent demonetisation of high denomination Indian Currency such as Rs.500 and Rs.1000 notes was a part of the Government to put a check on the unaccounted wealth and the counterfeit currency notes that are circulating in the economy. This is also a main cause for the remarkable features of terrorist and other illegal activities on the economy. Therefore, the overall objectiveof this research paper is to critically analyze the impact of Demonetisation on the Indian Economy with special reference to prospects, problems, difficulties and constraints faced by tourists, terror financing and common man.

THE DILEMMA OF DEMONETIZATION AND ITS IMPACT ON INDIAN ECONOMY

This article studies the background and impact of the recent demonetization initiative taken by the Indian Government. Upon the advice of Reserve Bank of India (RBI), Government of India demonetized all old bank notes of ₹1000 and ₹500 denominations and replaced them with new bank notes of ₹2,000 and 500 denominations. As per various statements by the government as well as commercial sources, the key motives of this policy were to counter the shadow economy and eradicate use of illicit and counterfeit cash being used in facilitation of the terrorism and illegal activities. The sudden nature of the policy announcement gave rise to various drastic problems e.g. prolonged cash shortages and public unrest that had a significant effect on small businesses, agriculture, and transportation, threatening the economic output. Simultaneously, it attracted heavy criticism from the opposition parties, prominent economists and international media. The move was widely commended by several prominent factions of the banking industry as well as international pundits. The policy was heavily criticized due to its poor planning and timing thus triggering protests, litigation, and strikes. As far as the economic impact of the policy is concerned, following the announcement, the indices of NIFTY 50 stocks and BSE SENSEX dropped by almost 6% along with various other economic factors which have been discussed later in detail. The move also affected India?s GDP and industrial production. In this paper we will discuss the primary motives and benefits of this policy as well as its impact on the socio-economic scenario of India and her people along with recommendations for future.

Demonetization in India: Rationale, Efficacy and Impact

Prakash Publications, Changanacherry, Kerela, 2017

The first Anniversary of demonetisation is celebrated by Government of India as 'Anti-Black Money Day' whereas the opposition parties led by congress celebrated it as a 'Black day' Post demonetisation, when Banks have received Rs15.28 trillion ($239 billion), or 99% of the currency invalidated, does it mean all the black money has become white or otherwise. The Nobel laurates, international and domestic financial institutions, Economists, intellectuals and common man differed about the relevance of demonetisation and its impact. Few supported while few opposed; few said positive impact while free said it as disaster. For example:- Amartya Sen termed it as 'gigantic mistake both in terms of dealing with corruption as well as the objective of one rapid jump of getting into a cashless economy. He also called it as 'despotic action that has struck at the root of economy based on trust...if (demonetisation) undermine notes, it undermines bank accounts, it undermines the entire economy of trust.

India: Currency Demonetisation and the Way Ahead

Management Insight, 2016

In the backdrop of the recent Demonetisation promulgated by the PM on the night of 8 th Nov., 2016, this paper attempts to put together the opposing views among economists, highlight the direction in which cash is headed and also lists the way ahead for India to emerge as a cleaner and transparent marketplace. Some economists opine recent demonetisation as a big bang structural reform the Indian economy needed. Almost all asset classes were reeling under huge price bubbles and assets like a decent house, gold had almost become inaccessible for the aamaadmi. In the short run, definitely the entire nation will pay the costs, however in the long run, this step will prick the asset price bubbles and cause prices to hover close to their real values, give a hit to parallel economy and reduce overall crime. On the other hand, for some economists, this demonetisation is more of a palliative to suppress the ills in the economy. Only some black money holders will get trapped and be impoverished for a lot of others may still find channels to offload their black money. Evidence from other nations show that the stride towards cashlessness is an inevitable step and for countries hitherto dependent on cash, its better late than never. The question is not whether or not to move ahead. Its rather about how to manage all the bedlam that the demonetisation has caused. The demonetisation in India is a clear indication of where the nation is moving. Cashless India is apparent, inevitable and needed! The paper also goes on to suggest measures such as gold registry along with real estate digitisation and periodic demonetisation of BCNs to give a final blow to the black economy.

Demonetization Strategy: Impact On The Indian Population

İlköğretim Online , 2021

The discussion post in favor of demonetization is that the cash that would be quenching “black money” should be lawfully put out to set right the perverse incentive arrangement in the economy. This article has attempted to assess the impact as well as consequences that occur during demonetization and how the tool of Demonetization can be used to exterminate parallel economy. Demonetization is one of the big steps initiated by the Government in addressing several issues like black money, fake currency, corruption, terrorism, etc. The history of demonetization in India and around the world is addressed. Lessons from historical demonetization direct us to redefine a country’s financial system by overpowering the previous causes of failure. Demonetization obliviously brings a lot of embarrassment to the ordinary population but it is for only the short term. However, the long-term benefits of demonetization override the short-term challenges.

Demonetization in India: An Evaluation

Asian Journal of Economics, Business and Accounting

The aim of this paper is to discuss the motives and after effects of demonetization decision taken by the Indian Government on November 10, 2016. In addition, it has tried to highlight the demonetization effects in some other countries. The opinions of economists, financial analysts and intellectuals have been highlighted on this paper based solely on published information collected from previous articles, newspapers and books related to the subject matter. The paper will hopefully come to the help of those academicians seeking to investigate more and the policy makers who want some academic references.

Demonetisation: Some Theoretical Perspectives

On November 8, 2017, the Prime Minister of India Narendra Modi declared currency denominations of Rs.500 and Rs.1000 to be illegal for use in transactions. These currency denominations together constituted almost 85% of total currency in circulation according to some estimates. Based on essentiality of money, and a simple textbook version of a segmented markets model, I analyze the effects of this surprise demonetisation policy on the Indian economy.

Demonetization: Redefining Indian economy

International Journal of Commerce and Management Research, 2016

This article has made an attempt to assess how the tool of Demonetization can be used to eradicate parallel economy. Demonetization is one of the big steps initiated by Government in addressing the various issues like black money, counterfeit currency, corruption, terrorism etc. History of demonetization in India and around the world is addressed. Lesson from historically demonetization guides us how to redefine economy of country by overcoming the earlier causes for failure. Demonetization obliviously brings many inconveniences to common people but it is for only short term. However the long term benefits of demonetization overrides the short term challenges. Government initiatives like Income Declaration Scheme 2016, Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, Joint Declaration of AEOI between India and Switzerland to address black money etc. in redefining Indian economy are to be appreciate and these initiatives leaves their footsteps as part of history.

Demonetization and Its Impact on Common People and the Economy

Global journal for research analysis, 2018

Demonetization of currency is a radical monetary step in which a currency units status as a legal tender is declared invalid. In November 2016, the government of India has taken a bold step to demonetize Rs. 500 and Rs. 1000 currency notes which are the two biggest denominated notes accounted for nearly 80 percent of the currency supply. In India demonetization move has been taken to unearth black money, to trace fake currency, to transform Indian economy into cashless economy, to control terror funding and so on. This decision taken by the government is for welfare of the nation, but so many questions comes in mind that, what will be the short term and long term impact of this decision on Indian economy? What is the impact of this decision on common people? Would the Indian economy be prosperous or would be poor and so on. Against this backdrop the present study is being proposed with following objectives – To study the impact of demonetization on common people. To study the positi...