Impact of Demonetization on Indian Economy

COMMERCE

Demonetization refers to the withdrawal of a particular form of currency of the nation from circulation. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be removed and substituted with a new currency unit. The study attempts to analyze the impact of demonetization on the Indian economy. The study is based on secondary data. The required data has been extracted from the various sources like research papers, published sources like reports, magazines, journals, newspapers and the authenticated websites. The study found that, by demonetization, black money will be taken out of Indian system; corruption will also be automatically reduced. The Indian government’s stated objective behind the 2016 demonetization policy are as follows; first, to make India corruption free, second, to curb black money, third, to control inflation, fourth, to stop terror financing, fifth, to make the people pay income tax and finally, to make a cashless society and create Digital India. The demonetization policy is seen as a financial reform in the country but this decision is fraught with its own merits and demerits. This paper has made an attempt in analyzing the impact of demonetization on various sectors and the economy as a whole. Keywords: Demonetization, Impact, Jan Dhan Accounts, Corruption, Black Money, Liquidity.

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