DEMONETISATION NOVEMBER 2016 - A FIASCO!

Accountancy

Second National Level Interdisciplinary Seminar on "Exploring Emerging Trends and Innovation in Research in Commerce, Science & Technology, Humanities and Social Sciences”

Demonetisation as a blunt instrument of economic policy was used by various countries of the world in the past. It was also implemented by the Government of India in the past. Prime Minister Narendra Modi announced on 8th November, 2016 the Government of India’s decision to cancel the high denomination currency of 500 rupees & 1000 rupees as the legal tender with effect from 9th November, 2016. The demonetization of currency was motivated, as per the press release issued by the Government of India to eliminate black money ‘which casts a long shadow of parallel economy on our real economy’ and to curb counterfeit currency, which is used to finance terrorism and drugs and as a conduit for money laundering. The Government also said that in place of the delegalized currency notes, it will introduce two notes in the denomination of 500 rupees and 2000 rupees, which will be distinctly different from the outgoing notes in size, design, colour and look. However, the key point to the issue was whether procedure followed for the process of demonetization of the high denomination which is 86% of the money in circulation was planned out and modalities properly decided to tackle the implementation of this decision. Also, whether it served the intended purpose for which it was implemented. The main source of data is secondary, journal articles and conference papers related to demonetization in general and information regarding the current demonetization policy announced on 8th November, 2016 in particular are considered. Here an attempt has been made to scrutinize the reason for the failure on the part of the Government to properly implement the Policy and the hardship caused to the public in general.

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