UNIVERSITY OF MUMBAI

PROJECT REPORT

ON

“A STUDY ON DEMONETIZATION AND IT’S EFFECTS IN

BHIWANDI”

SUBMITTED BY

ALASPURE PRAGATI

ASHOK

THE AWARD OF THE DEGREE OF

BACHELOR OF BANKING & INSURANCE (B&I) SEM-VI

EXAMINATION NO:-

ACADEMIC YEAR 2019-20

GUIDED BY

PROF.CHARMI GONDALIYA

PADMASHRI ANNASAHEB JADHAV BHARATIYA SAMAJ UNNATI MANDAL’S

B.N.N. COLLEGE, BHIWANDI

DIST. THANE 421302

 DECLARATION

I Miss. ALASPURE PRAGATI ASHOK, Exam No:____________

Student of B.N.N College, Bhiwandi of T.Y.B.Com (BACHELOR OF
BANKING & INSURANCE), Semester VI, hereby declare that I have
completed project on “A STUDY ON DEMONETIZATION AND IT'S
EFFECTS IN BHIWANDI” is a record of independent research work
carried by me during the academic year 2019-20 under the guidance of
PROF.CHARMI GONDALIYA. The information submitted is true and
original to the best of my knowledge.

ALASPURE PRAGATI ASHOK.

 SELF-FUNDED COURSES
“A” NAAC Accredited

BACHELOR OF FINANCIAL MARKETS (FM)

CERTIFICATE

This is to certify That ALASPURE PRAGATI ASHOK, Exam

No.:___________ Of T.Y.B.Com (BACHELOR OF BANKING &
INSURANCE), B.N.N College, Semester VI (Academic Year 2019-20)
has successfully completed the project entitled “A Study On
Demonetization And It's Effects In Bhiwandi” and submitted the project
report in partial fulfillment of the requirement for the award Of The Degree
Of BACHELOR OF BANKING & INSURANCE, of University of
Mumbai.

Prof. Charmi Gondaliya Dr. Dr. Ashok. D.Wagh

(Project Guide) (Co-ordinator) (Principal)

Examiner: -__________

Date: - __________

College Seal
 ACKNOWLEGMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous. I would like to acknowledge the following as being idealistic channels
and fresh dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project. I would like to thank my Principal, Dr. Ashok D. Wagh for providing the
necessary facilities required for completion of this project. I take this opportunity to
thank our Co-ordinator Dr. ………..….. for her moral support and guidance. I would
also like to express my sincere gratitude towards my project guide Prof. Charmi
Gondaliya whose guidance and care made the project successful.

I would like to thank my College Nirlon Library, for having provided various
reference books and magazines related to my project.

Lastly, I would like to thank each person who directly or indirectly helped me in the
completion of the project especially my parents and peers who supported me
throughout my project.

ALASPURE PRAGATI ASHOK.

 CHAPTER-1.
INTRODUCTION
• INTRODUCTION TO DEMONETIZATION:

Demonetization is the act of removing the current currency from the economy and
replacing it with the new one. Removing the legal tender status of a unit of currency
is a drastic intervention into an economy because it directly effects the medium of
exchange used in all economic transactions. It can help stabilize existing problems,
or it can cause chaos in an economy, especially if undertaken suddenly or without
warning. That said, demonetization is undertaken by nations for a number of
reasons. Demonetization occurs when a government removes a currency’s legal
tender status, which means the money is no longer officially recognized as a
medium of exchange for meeting financial obligations or settling debts. Typically,
old notes are retired and replaced with new ones. In cases where
the intent is to stop corruption, demonetization usually targets only large-
denomination banknotes. By contrast, if the intent is to cut zeros from existing
price levels, introduce policies that dramatically reduce hyperinflation rates, and/or
restore public confidence in the monetary system, a government may demonetize
by introducing a totally new or renamed currency.
On November 8, 2016, India’s prime minister, Narendra Modi, made a surprise
evening television appearance to announce that, starting at midnight, the nation’s
500-rupee and 1,000-rupee (i.e., Rs 500 and Rs 1,000) currency notes would no
longer be legal tender. India’s demonetization is just one important part of a much
broader plan to reduce corruption, digitize the economy, and improve the nation’s
infrastructure. In India Demonetization made vibrations in the operations as well
as products and services of Banks. It created greater demand to digital
banking services where cashless transactions are prioritized. It made greater
influence on Management of liquidity and its demand raised by customers in
exchanging of their banned currency notes while minimizing risk and maximizing
quality of service. At the same time meeting the guidance of Reserve Bank of India
was challenging. Demonetization has disturbed the bank operations and made the
employees to work under unconditional stress in extended working hours of a day.
Most of the banks were not able to discharge other banking services while
exchanging the banned currency notes. Hence, the present study is made to figure
out the influence of demonetization on banking sector. It showcases post
demonetization effect on banks and its operations.

New currency notes of Rs 2000 and Rs 500 :

Post demonetization, RBI issued currency notes of Rs.2000 and Rs.500 under
the new Mahatma Gandhi series of notes. These newly released notes are entirely
different from the previous higher denomination banknotes, and has a number of
additional security features. It is true that some inexact information has also been
circulated on social media platforms following the devaluation of Rs.500 (old
currency) and Rs.1000 notes. For example, there were rumors on social media
about chips being embedded into the new currency notes, which was later dispelled
by RBI in an official statement.
• MEANING :
Demonetization is a act of stripping a currency unit of its status as a legal tender.
Demonetization is necessary whenever there is a change of national currency
replacing old unit with new one. The opposite of demonetization is remonetization
where a form of payment is restored as legal tender.It refers to a drastic intervention
into the economy that involves removing the legal tender status of a currency.
Demonetization has been used as a tool to stabilize a currency and fight inflation
,to facilitate trade and access to markets, and to push informal economic activity
into more transparency and away from black and grey markets. It has been used to
stabilize the value of a currency or combat inflation. Demonetization is a proper
description of a currency amount, usually for coins or banknotes. In the process of
demonetization, a particular unit of currency is completely banned for use by the
general public or members of the government. The old currency is monetized in
such a way that it becomes instantly invalid and has to be either replaced by the
new currency issued against it or deposited in banks. When a legal tender is
demonetized by the government, it loses its value in the market, instantly becoming
trash. When a government withdraws the old currency from the market, it can issue
a new currency. Demonetization information is kept confidential until the last day;
otherwise, it would defeat the purpose of demonetization on its own. The main
objective of demonetization is to conflict tax avoidance and circulation of black
money as well as counterfeit or fake currency. If the notice of demonetization is
leaked in any way, it gives enough time to tax evaders and black money holders to
convert their money into other legal forms like – land, gold, jewellery etc. will
never reach banks

• DEFINITION:

• Demonetization is a process of removing a currency from general usage, or

circulation. It helps to remove the black money from country and stop the
corruption and terror funds. It occurs whenever there is a change of national
currency: The current form or forms of money is pulled from circulation and
retired, often to be replaced with new notes or coins
• It is an act of cancelling the legal tender status of a currency unit in circulation.
Anticipating positive changes on the liquidity structure as a whole, nations
often adopt Demonetisation policy as a measure to counterbalance the current
economic condition. Countries across the globe have used Demonetisation at
some or the other point to control situations such as inflation and to boost
economy. In November, Indian government banned the high denomination
notes of Rs.1000 and Rs.500 as move to curb counterfeiting and money
laundering.

• BACKGROUND:

India has demonetized before: First time on 12th Jan 1946(Saturday),second time
on 16th Jan 1978 (Monday), Third time on 8th November2016 (Tuesday).In 2016,
the Indian government decided to demonetize the500- and 1000- rupee notes, the
two biggest denominations in its currency system; these notes accounted for 86%
of the country’s circulating cash. With little warning, India's Prime Minister
Narendra Modi announced to the citizenry on Nov. 8 that those notes were
worthless, effective immediately – and they had until the end of the year to deposit
or exchange them for newly introduced 2000 rupee and 500 rupee bills. Surgical
Strike on Black Money called “Demonetization” brought enormous changes in all
the sectors of the country.
The whole country was taken aback when Prime Minister Narendra Modi on
November 8 announced that the currencies in the denominations of Rs 500 and Rs
1,000 will be invalid post midnight. However, the lower denomination –Rs 10, Rs
20, Rs 50, Rs 100 and coins –will be valid. He further announced that new notes
of Rs 500 and Rs 2,000 would introduce shortly. Thus, giving millions of Indians
a panic attack.
But what do you think was this the first time an Indian currency was banned of a
sudden?
Well, the answer is NO. A look into the past will make you realise that India is no
new to demonetization. Demonetization has been implemented twice -1946 and
1978 – in the past.

The first currency ban:

In 1946, the currency note of Rs 1,000 and Rs 10,000 were removed from
circulation. The ban really did not have much impact, as the currency of such
higher denomination was not accessible to the common people. However, both the
notes were reintroduced in 1954 with an additional introduction of Rs 5,000
currency.
Rs 500 and Rs 1000 notes were introduce in 1934 and after four years in 1938, Rs
10,000 notes were introduce.

The second:
That came in 1978; the then Prime Minister of India Morarji Desai announced the
currency ban taking Rs 1000, Rs 5000 and Rs 10,000 out of circulation. The sole
aim of the ban was to curb black money generation in the country.

New currency notes other than Rs 500 and Rs 2000:

Current circulating banknotes:

As of 26 April 2019, current circulating banknotes are in denominations of Rs

5, 10, 20, 50 and 100 from the Mahatma Gandhi Series and in denominations of Rs
10, 20, 50, 100, 200, 500 and 2,000 from the Mahatma Gandhi New Series.

VARIOUS CONCEPTS RELATED TO DEMONETIZATION:

POSITIVE IMPACT OF DEMONETIZATION:

• Increased Savings – When currency is demonetized, people tend to deposit
their cash with a bank and store less physical currency at home. This helps them
save more.

• Lower lending rates – With currency demonetization, money moves from

people to banks and financial institutions. Therefore, there is a better circulation
of money. Further, banks and financial institutions have a lower cost of funds
which translates into lower lending rates.

• Better economy – Since demonetization induces people to deposit their

cash with the banks, there is a higher circulation of money in the economy. The
government receives more taxes and can undertake more development
projects. Eventually, this leads to a better-performing economy.

• Curbing anti-social activities – Usually, anti-social elements like

smugglers or terrorists use cash as a mode of transaction. When the government
decided to demonetize 500 and 1000 rupees notes, they were the highest
denomination notes in circulation. By demonetizing them, the government
forced these anti-social units to find ways to get rid of the old notes. This
allowed the government an opportunity to get a better control over the
unaccounted money in the economy and curb anti-social activities.

• Reducing counterfeit currency notes – During demonetization, people

deposit all old notes with banks who check if the notes are genuine or
counterfeit before accepting them. Therefore, this allows the government to
weed out counterfeit notes circulating in the market.

• Stored money by terrorists becomes invalid: The flow of currency

to support terror groups has stopped. As a result, many states are back to
normal.
• Digital mode of payment: Even small-scale shopkeepers have started
accepting digital mode of payment as they are left with no other choices which
prevent them to ask for higher price.

NEGATIVE IMPACT OF DEMONETIZATION:

Liquidity crisis:
Demonetization gave rise to liquidity problem as people found it difficult to get
sufficient amount of cash to fulfil their basic needs. Marginal section of the society
mainly depends on cash to meet their daily transactions. Out of total currency in
circulation 500 rupee notes constituted nearly 49% in terms of value. More the time
isrequired to resupply Rs 500 notes, the more will be will be the duration of the
liquidity crisis.

Usage of Online Transaction:

Use of online trans-action is one of the best solution but challenge isthat many
individuals who are of old age do not uti-lize smart phone and if they use then
also big ratioamong them is of individuals who do not feel secureon exchanging
the cash through online.

Medical Treatment:
The most bad hit are the in-dividuals who are not on plastic money and needto deal
with urgent medical treatment. The privateclinics and chemist are not tolerating
old notes nor extending credit.
Marriage Functions:
The individuals permitted towithdrawal of Rs 2.5 lakh in cash. Even for that
amount a lot of restriction have been imposed. Many are not getting Rs 2.5 lakhs
because of deficiency cash in the bank.
Daily Wagers:
Unskilled workers and daily wagersare jobless as their employers need cash to pay
themin cash. online transaction was not suitable for them.
Foreign Tourists:
Foreign tourists who have with-drawn cash after arriving to India are among
themost bad hit. Rather than enjoying the holidays inIndia they are hurrying around
in an outsider land,endeavoring to secure legal currency. The negative criticism to
the tourism industry which will influence its reputation.
Property Prices:
With less potential purchasers inthe market and less individuals having white
money,the demand for the land goes down and drives downits cost. This accelerate
the demand for land holdingwhich could drive the property costs higher later on.
Wholesale Shopkeepers:
The trader class, is influenced given that most of wholesale shopkeepers keep
liquid cash to purchase material consistently. Not every traders keep cash
in a bank. Huge numbers of traders have incurred losses as a result of the liquidity
drying up in the market.

Loss of well being:

Most of the population who constitute the lower middle and lower class uses
currency to meet their dailytransactions. Such class of the society such as daily
wage labourers, small traders and other marginal section ofthe society use cash
more often. These sections of the society have lost their income in the scarcity of
cash.Cash crunch made firms to cut their labour cost and thus reduces the income
of the lower middle class.

Consumption:
Cash shortage adversely affected the consumption behaviour of the people in India.
The sales of consumer durables likely to be hampered in short term, especially
sales through unorganized channels are cash purchases. Most of the purchases by
retailers are through cash which brought down their volume of trade

Decrease in GDP:
Withdrawal of highest currency notes reduces the growth rate of the economy.
Demonetization reduces consumption pattern, income, investment etc. This may
bring a slowdown in India’s growth rate as the liquidity Crisis itself may last three
-four months.

Expected Result Not Found: The Reserve Bank has said that after the ban,
the amount of Rs. 16,000 crore did not come back to the banks which can be
considered as the profit of the government. But the government spent Rs. 7,965
crores on the printing of new notes. So if we deduct this amount from the 16000
crores then total profit of the government is reduced to Rs. 8035 crore only.

No Abatement in the Corruption: The government claims that the

demonetization has reduced the corruption in the country which is not true. A
recent report released by the Transparency International says that India is the most
corrupt country in the Asia.

The Logic of lack of Terrorism: Some people believe that the

demonetization has reduced the terror activities in the J&K and in rest of the
country but this is true only for a short period. Now the incidents of encounters in
j&K with the security forces are still reported on daily basis.

Note Printing Cost: According to the figures released by the Reserve Bank of
India, the cost of printing notes increased to Rs 7,965 crore in FY17, which was
Rs. 3,421 crore in FY16. So demonetisation increased the cost of printing currency
notes in the country.
No reduction in fake Notes: The number of fake notes in the banking system
jumped by 20.4 % to 7,62,072 during 2016-17 compared to previous year. During
2015-16, 6.32 lakh fake currency notes were detected. Apart from this, we have
heard the news of the fake notes coming out of ATM across the country.

Fall in Employment: India’s employed force grew from 401 million in April
2016 to 406.5 million in December 2016, it fell to 405 million between January
and April in the year 2017.There are 73% Manufacturers did not hire for 3 months
after the demonetization.

Decrease in GDP growth: During the Demonetisation, many industries were

not able to continue their production activities this is why the country's growth rate,
which was 7.5% in September 2016 declined to 5.7% in June 2017. It means the
demonetisation caused reduction of 1.5% in the Indian GDP.

EFFECTS OF DEMONETIZATION ON BANK OPERATIONS:

Demonetization has brought plethora of challenges in additions to the challenges
which are already facing by Banks. The influences were short-term and long-term
views. In short-term, it disrupted the banks and stressed strongly to carry out bank
operations and in long run it helped the banks to pool the deposits without incurring
of any cost. Here are four influences of demonetization on Banks.

POSITIVE EFFECTS:
1. Increase in Deposits:
demonetization has increased the deposits in Banks. Unaccounted money in the
form of Rs.500 and Rs.1000 were flowing to the Banks and the sizes of deposits
have been increased. It helped the banks to grab the deposits and increase their
deposits.

2. Fall in cost of Funds:

Over the past few months, the deposits are increased. It led the banks to keep a
major part of deposits in the form of cash deposits. PSU Banks have a lion share
(over 70%) of the deposits and biggest gainers of the rise in deposits, leading to
lower cost of funds.

3. Demand for Government Bonds:

After sharp rise in deposits on post demonetization, banks started lending such
surplus deposits to the RBI under the reverse repo options. PSU Banks,
particularly, deployed excess funds in government bonds. The return on bond
investment is likely to add 15 to 20 per cent increase in the earnings of banks.

4. Sagginess in Lending:
lending growth of the banks is considerably less even after demonetization and its
impact of growth in the amount of public deposit. Banks have tried to lend the
money to the needy group by reducing their interest rates, but it shrunk over the
last few months.

Similarly, Demonetization has brought some operational issues to Banks. It

disturbed Bank‟s Employees, Operational Costs and Profitability. The following
are negative influences of Demonetization.

NEGATIVE EFFECTS:
1. Cash Reserve Requirement:
100% CRR on incremental deposits meant that banks did not earn any interest on
Rs. 3 Lakh crore of deposits for nearly a fortnight.

2. Waived off ATM Charges:

ATM charges were waived off during banned note exchange and banks incurred a
loss of Rs. 20 in every transaction.

3. Waived off Merchant Discount Rate:

Banks incurred loss of 1% discount charges from merchants on using of every card
transaction.
4. Non Selling of Loans:
Banks were focused on exchanging currency notes and they were not able to sell
any loan products. This made banks to curb their lending activities.

5. Reduced SMEs Sale and influence on NPAs:

During demonetization, some SME businesses had seen their sales drop by 50-80
percent and could default in their installments to banks. This led the banks to
consider it as NPA and affected its level in banks.

6. Stress on Employees:
Bank Employees were put under pressure and overtime work environment. It
depressed them and kept imbalanced life style. Few cases were found where the
employees committed suicide due to work pressure

OBJECTIVES BEHIND DEMONETIZATION:

• To control the circulation of the fake currency.
• To cutoff the supply line money, arms and immunizations to terror funding.
• To transform Indian economy into cashless economy.
• To bring tax evasion to halt.
• To unearth and curb the black money.
• To curb the illegal and unethical business activities such as, the black
marketing, food adulteration, marketing of spurious goods, human
trafficking, smuggling of gold and drugs.

FEATURES OF DEMONETIZATION:
1. As tax administration measure:
People having cash falling under declared income deposited their cash in banks
immediately to be exchanged for new notes but those with black money had to pay
taxes at a penalty rate.

2. As a shift on the part of the government:

Demonetization is being considered as a strict measure by the government against
tax evasion which will not be tolerated or accepted.
3. Channelizing savings into the formal financial system:
Though , much of the cash deposited in the banking system is likely to be
withdrawn but some of the new deposits schemes introduced by the banks will be
used as loans, at lower interest rate.

4. Creation of a less cash or cash lite economy:

Another feature of demonetization is to help in channelizing more saving through
the formal financial system and improving tax compliance.

Procedures for Demonetization Management:

In terms of preparation, the preliminary exercise started since January 2016 where
the Reserve Bank of India and the government were in regular touch over the
demonetisation of Rs 500 and Rs 1,000 notes and printing of a new series of notes.
The secrecy of the move was kept at a high level with no formal record of minutes
of all the interactions. The actual decision was taken around May 27, 2016.31 The
design of new banknotes of Rs 500 and Rs 2,000 denominations was approved at
the May 19, 2016 meeting of the Central Board of RBI.32 RBI governor informed
the parliamentary committee in January 2017 that of the Rs 15.44 lakh crore that
was demonetised, Rs 9.2 lakh crore had been replaced by way of new currency
notes. In fact Government had a challenge to replace the Rs 23 billion notes.33 In
order to ensure that there is no premature leak it was mentioned that the ministers
who attended the Cabinet meeting on 8th November had to stay back till PM’s
address to the nation got over. Even members of the Reserve Bank of India board
too left only after Modi’s speech. The move was very strategic in terms of timing
as the Cabinet meeting ended around 7.30 pm and RBI board also met around the
same time. Add to it, about few weeks ago of the demon move, the cabinet
secretariat had issued a circular, to personal staff of all ministers, advising ministers
not to carry mobile phones to the Cabinet meetings.

Processes after the Announcement :

The demonetization in the economy got adjusted amid various notifications around
70 in number in 50 days time. The notifications came in view of the contemporary
market practices related to the exchange ordeposit or withdrawal of the money. On
the first day (November 9), it was notified to keep the banks close and ATMs to be
closed on 9th and 10th day of November. Initially the limit for ATM withdrawal
was pegged at Rs. 2000 per day per card however same was increased to Rs. 4000
and then finally Rs. 10,000 per day. In order to ease the transactions banks were
notified to operate even on Saturday and Sunday (12th and 13th Nov 2016).
Keeping in view the transactions problem due to shortage of new currency into the
system, the old notes of Rs. 1000 were made the legal tender at specific places such
as at international airports: For passengers up to Rs 5,000; for foreign tourists to
exchange forex or specified bank notes (SBN’s), up to Rs 5,000. Meanwhile the
cash withdrawal over the counter was restricted to Rs 10,000 per day per subject
to an overall limit of Rs 20,000 per week till Nov 24. On November 13, the weekly
ATM limit for withdraw was gradually raised to Rs 24,000. By November 15, with
the possibility of illegal exchange of money increasing, while exchanging SBNs,
the bank branch and post offices used to put indelible ink mark on the right index
finger of the customer to identify that he/ she has exchanged old notes only once.
On December 30, the closure of the scheme of exchange of SBNs at banks, all
banks had to report information on collection of SBNs on Dec 30 itself in email.
Further, daily limit of ATM withdrawal was raised from the existing Rs 2,500 to
Rs 4,500 per day per card with effect from January 01, 2017. Meanwhile the digital
transactions were incentivized as finance ministry announced 0.75 per cent
discount on purchase of petrol/diesel through digital means, and 8-10 per cent
discount on online insurance purchase from public insurers.

• Pros of Demonetization:
• The menace of black money can be controlled to some extent
• Terror financing, using black money for illegal activities etc will all take a hit
• The counterfeit currencies which have an impact on the real economy, will be
rooted out
• The mobilization of deposits in the banks will increase, which may lead to
increased credit flow and lowering of lending rates
• The black money adds to the inconspicuous demand and hence the inflation to
some extent will be under control
• The government is also aiming to raise its revenue collection (eg- by taxing
exorbitant IT rates over certain deposits, the tax collection in other forms will
also increase etc)
• The real estate is one of the major sources of black money generation. With this
move it is expected that the property market rates may bottom out or moderate
• It’s a major step by the government towards forming a cashless economy
• The honest workers will be rewarded under such scenario
• The elections are usually associated with black money generation and
circulation, with this scheme the funding of elections through nefarious ways
will be hit
• It is expected that with this move the Fiscal Deficit of the government may come
down

• Cons of Demonetization:
• For one all the black money is not stored in the form of cash only and secondly
the measure takes care of result but not the cause-black money is generated
mainly because of corruption and tax evasion. This measure controls the usage
of black money but cannot control the causes
• Sudden and huge demand for the new currencies
• Panic amongst the common man (already we have seen the case wherein people
have looted fair price shop in MP, Cash Carrying companies seeking higher
insurance etc). already the panic has led to people hoarding currencies which
has further reduced the liquidity in the market
• The small trade/shopkeepers are facing difficulties
• Black marketing of the new notes/currencies is on the rise
• The establishments such as banks, hospitals etc are under lot of stress
• Another area which is a cause of worry is the likely drop in the rural demand as
the cash usage will become restricted. Apart from this the experts are also
expecting an impact on SME sector, agricultural production (the economy was
expected to perform well as there was an expectation of a good rabi crop after
two bad monsoons but a prominent economist, Pronab Sen has said that
demonetization is akin to third bad monsoon year as it will have an impact on
agricultural production, but the more dangerous situation is this having a
spillover effect on to fertilizer, tractor sectors)
• Challenges:
→ The coverage of the banking sector-
• Only 27% of the villages have a bank within 5 Kms (as per Economic Survey
2015-16)
• In spite of recording breaking implementation of JDY, the banking penetration
is low-on an average 46% in all the states (as per Economic Survey 2015-16)
Another challenge in implementing and eradicating black money would be
presence of informal economy. It accounts for 45% of GDP and 80% of
employment hence this move may have a greater impact on informal economy.
Logistics and cost challenges of replacing all the Rs 500 and Rs 1000 notes – as
per the RBI documents this measure would cost at least Rs 12000 crore as it has to
replace over 2300 crore pieces of these currencies.
The decision to issue Rs 2000 denomination currency and withdrawal of Rs 500
and Rs 1000 currency will lead to huge challenge as most of the day to day
transactions in India are centered around Rs 500 note (more than 47% of the value
of notes in circulation is in Rs 500 note form).
The availability of Rs 500 and Rs 1000 notes will be the biggest challenge as both
of them covered over 85% in terms of value of total currencies issued.
The process has led to huge rush and long queues of the people in front of ATMs
and as per the statement of finance minister the ATM recalibration would take
around 2 to 3 weeks.
As per data furnished by the Finance Ministry, Rs 17,50,000 crore worth of
currency notes were in circulation in October-end, out of which over 85% per cent
or Rs 14,50,000 crore is in the now defunct Rs 500 and Rs 1,000 notes. So far for
the first four days the government has been able to pump in Rs 50000 cr (on an
average 12500 Cr). Going by these numbers it would take around 4 months to
replace these notes as against the 50 days promised by the PM.

• Worries:
• The rural demand even after a good monsoon is unlikely to pick up and
agriculture production is unlikely to achieve 3.5 to 4% GDP growth rate
• As per Prof Bhanumurthy (NIPFP) all the black money may not find its way to
the banks hence GDP growth rate may come down by 1.1% (the professor has
also remarked that the money which was not there in the system is being pumped
in and add to this if the online transactions are promoted then the GDP growth
may pick up rather than declining)
• As per economist Pronab Sen, this may lead to lowering of GDP by 0.2 to 0.3%
and in extreme cases we may end up achieving 7% (targeted is 8%)

• The opportunists:
The online service providers have up their ante when there is a shortage of currency
notes, pushing their products/services by providing discounts, coupons, credit etc.
For example, Paytm, which is the largest mobile wallet company, has said that it
(since the ban kicked in)

• Has seen a 700% increase in overall traffic on the platform

• 1000% growth in the value of money added to the Paytm accounts
• Average transaction value has increased by 200%
• Mobile app downloads have increased by 300%
• Has processed around 5 million transactions each on 12th and 13th (Saturday and
Sunday respectively) of this month
Measures by the Government to control black money

• One of the first cabinet decisions taken by the government was to set up SIT
(Special Investigation Team) on Black Money
• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of
Tax Act, 2015, came into force on July 1, 2015, under which the tax rate
imposed was 60%
• Further upon the leaks of Panama Papers, the government constituted a Multi-
Agency Group (MAG) comprising officers of the Central Board of Direct
Taxes, Reserve Bank of India, Enforcement Directorate and Financial
Intelligence Unit.
• Lok Sabha recently has passed the Benami Transaction Bill, 2015 which is an
anti-black money measure that aims to seize unknown property and prosecute
those indulging in such activities.
• This year the government has amended its DTAAs and is in negotiations with
some other countries
• It is also under negotiations with the authorities in Switzerland in signing
Automatic Exchange of Information (AEOI)
• In this year’s budget government had announced IDS (Income Declaration
Scheme) under which it has successfully collected Rs 65250 crore in the form
of taxes.

Effects of Demonetization on various sectors of Indian

Economy:
Demonetization, that sent a shockwave across the Indian economy, completes one
month since its announcement on the midnight of November 9. To uproot the
problems of corruption, black money, and counterfeiting, Prime Minister Narendra
Modi orchestrated this master plan which has reportedly swept off a mammoth
portion of India’s monetary base. It is anticipated that this surgical strike on black
money will also increase cashless transactions in the country and untie all knots in
tax collection. But on the other hand, rural households and elder citizens have been
worst hit due to the sudden monetary reform. The decision to scrap all Rs.1000
and Rs.500 notes have made it to headlines all over the world, attracting both
positive and negative comments.

Impact of Demonetisation on Indian economy:

In a country where 85% of transactions take place by cash, cancelling the legal
tender character of two high denomination banknotes arises a lot of questions. The
service sector in the country that depends mostly on cash transactions will be
adversely hit because of Demonetisation. Not to mention, the consumption activity
of India has come to a screeching halt. This drop in economic activity could last
for a few months and as a result, GDP could fall significantly from the previous
year’s values.

Even as country faces the greatest financial crunch of all times, some analysts
predict the economic conditions to stabilize in a few quarters. Deutsche bank and
Goldman Sachs expect India to join the list of the fastest growing economies by
next fiscal year. An improved monsoon season in 2017 can favor agricultural
economy of the nation, which in turn will add to the financial recovery as a whole.
Economists also predict that the decision to scrap high-value currency notes will
lead to GDP growth by 2%.

Some of the major effects of demonetization is as follows .

Effect on Parallel Economy:

One of the major objectives of the demonetization is to fight against the black
money. With the demonetization the black money within the economy will be
blocked as the owners of the black money in the form of 500 and 1000 rupee notes
cannot replace it and deposit it in the banks as it is not having the proper documents.
In this way the parallel economy will be affected to a greater extent which is the
positive impact of demonetization.

Short run effect on money supply:

Money supply will be reduced in the market due to withdrawal of currency notes
from circulation. This effect will be the short run impact of demonetization. The
problem of money supply will be solved when the new currency notes widely
circulated in the market.

Effect on Consumption:
Decrease in money supply as a result of demonetization is also having an impact
on production and consumption. Due to decrease in money supply production
decreases and it affect the consumption negatively.

Fall in the prices:

Prices for different goods will fall with demonetization of currency. The prices of
consumer goods and the prices of real estate sector are expected to fall.

Increase in bank deposits:

The demonetization increases the deposits in current account and savings bank
account. As government announced the demonetization, the money held by the
household sector for the emergency purposes will be deposited with the banks,
which will increase the deposits in the banks.

Increase in alternative modes of transactions:

Due to demonetization the cash transactions are facing a reduction, which
increases the other alternative modes of transactions like use of credit cards, debit
cards online payments and transactions etc.

Effect on Anti-Social Activities:

Demonetization is a mighty blow on the anti-social activities. Due to the
demonetization funding of anti-social activities, smuggling can be curbed. These
anti-social activities weaken the economy. It is difficult to the anti-social activists
to recover from this. So the anti-social activities can be curbed to a greater extent.

Effect of Demonetization on bullion market:

Demonetization is expected to bring sharp changes in the prices of gold, and it is
likely to start reflecting from the first quarter of 2017. At present, gold rates are not
being announced by most of the jewelers due to dampening trade. Recently,
government also announced the exemption limits on gold ornaments as the next
giant move to curb black money. The notification comes within weeks after
invalidation of Rs.500 and Rs.1000 notes. The following restrictions have been
placed on the possession of gold:

• A married woman in India cannot keep more than 500 grams of gold in
custody
• The limits for unmarried women are 250 grams
• Male members of the family can keep only 100 grams of gold.
• The rule is not applicable for legitimate gold belongings.

• Money In Market Post-demonetisation

• Before demonetisation, Indias money market had the overall circulation of
banknotes worth Rs 17.97 lakh crore on November 4, 2016. The banned
banknotes constituted 86.4 per cent of the total money in circulation.
• Today, according to the RBI, overall banknotes in circulation are worth Rs
18.03 lakh crore (March 2018). This means the volume of currency in
circulation is 9.9 per cent more compared to March 2016-level.
• The share of high denomination currency notes was 86.4 per cent at the time
of demonetisation. The RBI says that the share of Rs 500 and Rs 2,000 notes
is 80.6 per cent. This indicates a 5.8 per cent increase in the use of small
denomination currency notes.

Effects of Demonetization on real estate:

The unorganized sector will be largely affected by the invalidation of the higher
denomination currency notes. However, there won’t be much of a change in the
primary real estate market as property buyers make purchases either in the form of
cheques or through loans. The impact of Demonetisation may be felt in secondary
markets where most of the property dealings happen through cash. The currency
reform is likely to yield positive results in the real estate sector with increased
transparency in dealings. More opportunities can be expected from debt
investment, private equity, and FDIs as well.
Demonetization impact on equity and mutual funds:

The effect of Demonetization on equity funds is expected to be positive with more

money entering the organized system of financial transactions. If cash flow across
the nation is fully tracked, equities will strengthen significantly, as more people
will invest in equity linked savings schemes to save on taxes.

Impact on Expanding the Tax Base :

Demonetisation had a significant positive impact on the tax base and brought in
9.1 million new taxpayers in 2016-17 and 12.8 million in 2017-18. This increase
is largely attributable to demonetisation and the enforcement drive and Operation
Clean Money launched by the Income Tax Department post demonetisation. It may
be stated that only 3.1 million new taxpayers were added in 2014-15 and 3.6
million in 2015-16. Therefore, the figure of 9.1 million and 12.8 million new tax
payers in 2016-17 and 2017-18 is considerably higher and is attributable to
demonetisation. Though there may be an impact of other initiatives taken by the
government like rolling out GST in 2017 and improved administration by the tax
department, yet the major factors remain demonetisation, cash deposited in the
bank accounts post demonetisation and bringing such people in tax net by the tax
department. It is believed that the number of new taxpayers have increased further
by 8.4 million in 2018-19, though official figures are yet to be released by the
CBDT. In fact, the number of tax returns filed as on 31.03.17 were 5.58 crore and
that as on 31.03.18 were 6.86 crore. The total number of returns (electronic +
paper) filed during the entire Financial Year 2016-17 is 17.3 per cent more than
the returns filed during FY 2015-16. In fact for FY 2016-17, 1.26 crore new
taxpayers (return filers + non-filers making tax payments) were added to the tax
base as against the addition of about 3 - 3.5 million new tax payers added in earlier
years, which shows a significant impact of demonetisation on the tax base. The
number of permanent account number (PAN) allotments also increased from
100,000 earlier to 200,000 a day during this period, taking the figure in the PAN
directory to 300 million. The rise in figures of return filers (Table 1) amply
demonstrates the positive impact of demonetisation and the government’s resolve
to fight the menace of black money and to eradicate tax evasion in a non-intrusive
manner.

New Taxpayers added Post Demonetisation:

Year Increase in income tax returns filed New Taxpayers added
2014-15 11.78% 31 lakh

2015-16 9.9% 36 lakh

2016-17 17.30% 91 lakh

2017-18 24.7% 128 lakh

Impact on Bond market:

Surge in deposits will create more demand for government bonds and other high
rated bonds in a situation of tepid demands for credit, leading to lower bond yields
especially in the shorter end of the curve. At the same time, a reduction in leakages
in systemic liquidity will reduce the scope for open market operation purchases in
the coming days. We believe that the RBI will continue to sterilize excess liquidity
from the banking system to keep the short term rates aligned with the policy rate.

Jan Dhan accounts:

At present, the contribution of Jan Dhan accounts in terms of deposits has been
significantly low in the overall banking domain. But post Demonetisation, these
idle accounts are witnessing a steep surge in deposits. Another positive side of the
Demonetisation is that government’s financial inclusion plan will gain momentum
with a large number of people—including those from rural areas—opting for bank-
based transactions.
Effect on Luxury items:
will have a drastic negative impact. Majority of the people spend their undeclared
income on such products. After the decision, it is likely that all luxury segments
like clothing, electronics, luxury car, furnishing and allied business will take a hit.
Media and hospitality industries are also likely to get affected.

E-wallets getting a major push:

With the cancellation of Rs.500 and Rs.1000 currency notes, e-wallet companies
such as Paytm, PayU India, Mobikwik, etc. are witnessing a sudden rise in their
daily transactions. Demonetisation will also have an impact on the hiring needs and
other business functions of these companies. Even app-based cab companies are
launching their promotional materials to encourage cashless transactions .

Pre-owned vehicles market:

Sales activities in the in used vehicle market is expected to decline following the
Demonetization move. This can adversely affect the original manufacturers to a
certain degree, as prospective buyers may not find it easy to discard their old
vehicles and go for a new one.

Effect of Demonetization on interest rates:

As a result of increased liquidity, RBI is likely to cut down the rates of interests
applicable on fixed deposits, recurring deposits, and the like. Since banks are sure
to accumulate huge deposits in the months that follow, the borrowing cost for
Banks will be reduced. This benefit will be extended to customers in the form of
lower interest rates on loan products.

Demonetization and savings behavior:

The most common saving methods for Maharashtra respondents are in public
sector banks (81%), at home (51%), and in private banks (8%). With regards to
demonetization‘s immediate effect on savings, 34% report a decrease in informal
savings and 28% report a decrease in formal savings. As the decrease in one
savings form is not commensurate with the increase in another, there is evidence
to suggest that consumption may have increased in Maharashtra, if only
temporarily. The most common saving methods for Meghalaya respondents are in
public sector banks (66%), government cooperatives (29%), at home (21%), and at
the post office (5%). With regards to savings pattern post demonetization, 16%
report an increase in informal savings and there is a corresponding 13% decrease
in formal savings. The most common saving methods for Tamil Nadu respondents
are at home (89%), in public sector banks (30%), in private banks (28%), at the
post office (26%), and in selfhelp groups (12%). Respondents report a 46%
decrease in informal savings and a corresponding 35% increase in formal savings,
suggesting a shift towards formal savings in the months after demonetization

Effect on Gold prices:

As investors rushed to invest in safe havens, Gold Futures touched a high of
Rs31,376 and was trading at Rs30,500 up 2% immediately after demonetization.
Local shops have stopped selling gold in exchange of old notes and prevailing
prices are Rs31,800 per 10gm against Rs30,700 per 10gm. The demonetisation
move seems to have brightened jewellers’ fortunes, with many selling gold at 40-
60 per cent premium, against accepting the banned currency notes. Even after the
note ban, gold imports have been strong. According to estimates by GFMS
Thomson Reuters, gold worth $2.8 billion has been imported in the first 17 days of
November. Of this,$2.1billion worth of gold was imported nine days after
demonetisation.

Cement and steel industry:

A temporary decline in sales can be observed in the cement and steel sectors which
are closely linked to real estate. A closer look at the situation reveals sizeable
impact of Demonetization on construction industry—daily wage earners being the
worst sufferers. However, with an increase in bank deposits complementing the
savings rate, the short-term difficulties will be outstripped soon.

Short-term effect on GDP:

Reduced consumer demands owing to dulled cash flow will trigger a considerable
decline in GDP figures for a few quarters. The effect of Demonetisation on the
above-mentioned industries such as construction, gold, and other secondary
markets will be reflected in GDP. But, the situation will be under control once cash
flow is normalized in these areas of business.

Demonetization impact on Indian Rupee :

After demonetization of Indian currency on 08 nov 2016, rupee has became weaker
than currency of 96 countries or economies. Out of 161 countries’ currency, rupee
has became stronger than 60 currencies and is at same exchange rate with 5
currencies. If we take data for past 6 months before demonetization from 08 may
2016 to 08 nov 2016, rupee has became stronger than 125 currencies. But after 26
days of ban on Rs 500 and Rs 1000 notes, rupee has became stronger than only 47
currencies. Rupee has became weaker by 2.66% against US Dollar ($) from 66.40
to 68.17 INR per unit US Dollar. Rupee has become weaker against some popular
currencies like British Pound, Canadian Dollar and Hong Kong Dollar too. But
also became stronger than Euro, Australian Dollar, Swiss Franc, Singapore Dollar
and Japanese Yen.

Effects on MSMEs
Demonetization had a lasting effect on Indians MSMEs (Medium, Small and Micro
Enterprises). Various medium and small enterprises turned towards digitalization,
however, the micro industries were affected by the worst of its wrath. The micro
industry owners were not a part of the black economy and they were clearly
unprepared for the effects of demonetization. Many micro industry workers
returned back to villages and the growth rate of these
companies went as low as 1%. The MSME sector has been recovering from the
drastic changes and its impact on the revenue, but demonetization forced the
MSME sector to be friendlier and more accommodating towards the digital arenas
and made them more accommodating towards change.

Effects on tourism:
The most difficult period of demonetisation sits squarely in the busiest season for
the tourism industry. There was a slump in hotels and associated services bookings
in the first week after the currency withdrawal. However, the premium hotel
segment has not seen any impact as bookings are mostly done in advance and
online. So the hit has mostly been confined to the unorganized sector.

1. Impact on inbound and outbound level:

Travellers to India have faced a lot of problems during their trip as these tourists
are more likely to use cash, rather than cards. Exchange of currency has become a
task and with the unavailability of the currency, it was very difficult to find a good
bargain. It is not convenient for these travellers to use their credit or debit cards
because of the exorbitant transactional charges levied by their home banks. Many
travellers also complained that their e-cards were not activated for international
transactions as well. In the same way, travellers moving out of India are faced with
similar issues due to currency exchange. Since we Indians believe in 'Atithi Devo
Bhava', a lot of foreign tourists were helped by locals all over India.

2. Impact on domestic travel:

Indians already travelling within India have faced severe problems for obvious
reasons. Firstly, they have faced severe issues in payments because of the sudden
ban of notes. Hotels and restaurants have not been accepting the defunct currencies
and all ATMs haven’t been configured for the new notes.

3. Decrease in traffic on online travel websites:

The initial few days after the note ban have seen a severe impact on the online
travel agency’s traffic. The visits to the website had suddenly dropped initially.
However, it was just a temporary side effect.

4. Travel plans procrastinated:

Many travellers have procrastinated their travel plans due to many reasons, the
most important one being liquidity of funds. They also prioritised the bank work
before travel, due to government’s stringent deadlines on cash deposit and

currency exchange. The currency exchange has been so maddening that Indian
nationals have felt like foreigners in their own country.

5. Impact on restaurant reservation:

Restaurants have seen many cancellations and cases of no show. Restaurant

reservations in Delhi NCR dropped by 28%, in Mumbai by 7% and in Bengaluru
by 2%. This disruption has largely affected small-time hoteliers and restaurateurs.

6. Impact on airline booking:

The unexpected ban has seen a severe impact on airline booking as well, with a lot
of travellers postponing or cancelling their plans. Now with the economy being
more liquid, the bookings have picked up.

7. Drop in visitors to national monuments:

Due to demonetisation, the number of visitors to monuments of national

significance have declined. It was because most of the payments made here are in
cash. It is only understandable that even foreigners have faced issues visiting these
places.
8. Rise in digital payments:

On the other side, the travel industry has seen a lot of transactions done
electronically. However, this has been limited to places where POS and online
payments are available.

9. Small vendors have resorted to the use of digital wallets like

Paytm:

Because of lack of digital establishments, vendors have found it easy to accept

money through digital wallets. It is only the ease of paying money via a simple
phone number that has enabled this convenience.

10. Travel industry is bullish:

While most of these side-effects are temporary, it is believed that in due course the
pendulum will be back to normal. Travel is very optimistic about its pick up.

This change is expected to positively impact the travel scene. With a shift towards
digital money, we hope that it will make transactions safer for travellers. The ease
of plastic money is stimulated towards building a cleaner and safer India for
travellers.

Impact on consumer durables:

The market for white/brown goods still operates 80% on cash, thereby affecting
volumes. Makers of durable goods are launching new schemes to tempt consumers
to go cashless. Some of them are also extending discount offers and promotions
such as waiver of processing fees and installment schemes with delayed start of
payments.

Impact on Airlines:
Negative There has been a significant impact on inbound travel. Some airlines
have seen bookings go down by about 16% in the week after demonetisation
compared to the one before that. Discretionary travel has been the worst hit. Poor
sales have forced all airlines to bring forward their airfare sales—usually reserved
for the low season starting January. International traffic to West Asia and South-
East Asia, especially by traders and low-wage workers, has been hit. Business jet
operators say several charter flights have been cancelled as payments are often
made in cash.

Impact on Infrastructure:
Negative for now, positive in long term Power demand and road traffic have been
hit. Road companies faced short-term cash flow problems because they weren’t
able to collect tolls, but things are limping back to normalcy. Wage payment to
labour can be an issue for some time, which can impact execution in the short term

Effects On Daily Wage Workers:

A major portion of the Indian workforce is a part of the informal economy. They
use cash to meet all their expenses and demonetisation has resulted in a lot of them
losing their jobs due to unavailability of cash. According to CMIE’s Consumer
Pyramids Household Surveys (CPHS), approximately 1.5 million jobs were
lost during the final quarter of the financial year 2016-17. The estimated
employment during this period was 405 million as compared to 406.5 million
during the previous four months.

Following are some case studies related to demonetization:

Case Study – 1:
Life was good for Mitharam Patil, a wealthy money lender in a small village of
Maharashtra. Patil would typically lend cash to farmers and traders every day,
providing a vital source of funding for a rural economy largely shut out of the
banking sector, albeit at interest rates of about 24 percent. Patil was stuck with Rs.
700,000 of worthless cash. He could only withdraw up to 24,000 rupees from his
account every week, barely enough for his own personal needs as he also works as
a farmer. Demonetisation brought bad news for small farmers and traders who
depended on Patil, despite his high interest rates, given that bank branches are
located far from the village, while the process to obtain loans is long and
cumbersome (Choudhury & Jadhav, 2016).

Case Study – 2:
Amul, the dairy cooperative jointly owned by 36 lac milk producers in Gujarat has
adapted cashless mode in a massive way. Since 8 November 2016, 5.4 lac farmers
opened their saving accounts in various banks. With this, almost 18 lac milk
producers are now getting their money directly into their bank account. As per R.S.
Sodhi, Managing Director of Amul, farmers are now saving a lot more, optimally
planning their yearly financial goals, and with bank accounts, are able to get loans
at a lesser interest rate. Before this, loan lenders used to have a major influence in
their financial world, as the farmers used to get stuck within their high-interest trap,
and ended up spending more money. He said, “The response from farmers to open
bank accounts has been immense. Earlier, they were spending money recklessly
and had not developed the habit of saving. With their bank accounts now being
operational and a withdrawal limit in place, milk farmers have seen an
improvement in their savings too. Also, they can look forward to applying for loans
once they built a supporting credit history. And as per Amul’s own data, there has
been absolutely no reduction in their sales, except few products of ice-cream. Sodhi
said, “On the sales front, there was a short-term impact on discretion products such
as ice-cream. But there is absolutely no impact on sales of milk, butter and curd”.
Amul, which propelled India to become world’s largest producer of milk and milk
products, is now making India a cashless nation (Ghosh, 2016).

Case study – 3:
A 52-year-old small farmer who is also a daily wage earner in Kunkuri village,
Jashpur District, in Chhattisgarh, is the sole breadwinner of the family. Following
demonetisation, he did not have work for days at length as his contractor could not
withdraw enough money to pay for his work. In the meantime, he walked five
kilometres to reach the nearest bank hoping to exchange the little money 500 and
1000 notes that he had saved for the marriage of his elder daughter. He joined the
queue, braving the hot sun and hunger and fatigue. At the fag-end of the day, he
found he could not exchange all his money. So he exchanged 2000 to meet his
immediate expenses and deposited the rest of the sum in the bank, hoping to
withdraw the amount for the marriage at a later time. On reaching home, he took
his new 2000 to purchase some rice from the local shop. The shop keeper, citing
cash deficit, refused to sell rice to this farmer. The farmer had to buy rice for 1000
much beyond his current need and another 1000 was all he had to manage all other
expenses. When the day of his daughter’s wedding came close, he returned to the
bank to withdraw money. To his dismay, he could not withdraw his own money
when he needed it most. And, the marriage had to be postponed. The family had to
face the burden of uncertainty and anxiety over what would happen to her daughter.
Thus all around the country most of the rural people had to face the wrath of
demonetisation (Jebamalai & Arulraj, 2017).

Effects On Inflation:

The Reserve Bank of India (RBI) considers the Wholesale price index (WPI) and
the Consumer Price Index (CPI) to measure inflation. Demonetisation is expected
to reduce inflation as consumers have cut down on spending and aggregate demand
has considerably fallen. According to government press releases, the official WPI
for ‘All Commodities’ (Base: 2004-05=100) for the month of December, 2016
declined by 0.2 percent to 182.8 (provisional) from 183.1 (provisional) for the
previous month. The index started rising during the month of January and rose
by 1.0 percent to 184.6 (provisional) from 182.8 (provisional) for the previous
month. This may be correlated with the availability of cash with people which led
to increased spending.

Effects On Terror Funding:

Demonetisation was aimed as a clean-up of the economy where Fake Indian
Currency Notes (FICN) would be checked. It is aimed at rendering all fake notes
of rupees 500 and 1000 useless and thus drastically affecting illegal funding of
terror groups in Jammu and Kashmir, states in the North-East, and Naxalism-
influenced states.

Effects On Political Parties:

Many Political Parties use large amounts of undeclared cash to campaign for
elections and meet other requirements. Due to Demonetisation such acts might get
restricted to an extent and parties will have to formulate new strategies.

Effects Towards a Digital Economy:

Absence of liquid cash has led to people making transactions using cheques or
account transfers. They have also switched to virtual wallets like Paytm which
allows electronic transfer of money. All this might result in a digital economy
where transactions are being recorded and the economy has more white money.
This might increase the government’s tax revenue.

Effects on Agricultural sector:

In India more than 60 per cent of the population is directly or indirectly depend on
the agricultural or agricultural activities. Cash is the primary mode of transaction
in agriculture sector. The farmers struggled a lot at the time of demonetisation
because the saving habits as well the payment mode of farmers were only on cash.
70% of the farmers market their products through farm markets or they may be
street vendors where cashless transaction is impossible. The farmers who owned
limited acres had not keep lump sum in bank accounts largely due to fact of
low income and no knowledge about the digital transaction, which had a large
impact on the farmers at the time of demonetisation. Demonetization has
affected every Indian, but it has hit the agricultural sector the hardest. Because,
farmers cannot buy seeds, fertilizers and other things required for their winter
crops. As results, wheat outcome was decreased in northern India. Fruit and
vegetable farmers were also badly hit. They need cash on daily basis to purchase
inputs like pesticides, fertilizers and hired labour for harvest and also to transport
and sell at urban centres. Lack of cash with farmers leading to less-than optimal
use of inputs resulted in lower yields, reduced sales, higher wastage and lower price
realization. In the scenario of demonetisation of currency, most of the transaction
going on credit basis. The input dealers (seed, fertilizer and pesticide dealers) are
increasing prices by 20-30% of the normal price as the transactions were on credit
basis. In product market also big traders and commission agents are offering credit
to farmers at much higher interest (reaching 36% for just a month) than in normal
conditions. The cash crunch caused by demonetisation affected farmers badly who
were not acquainted with cashless transactions

Demonetized currency and small savings schemes:

Government has notified banks to not accept the discontinued currency notes for
deposit in small saving schemes. However, no reasons have been specified for such
a move by the competent authority. Small savings schemes are one of the most
sustainable financial options which provide greater returns with low risk factor.
Some of the popular savings schemes are Kisan Vikas Patra, Sukanya Samridhi,
Post Office Savings Schemes, etc. For those without access to banks, cash
transactions are the only practical means to meet their everyday requirements and
for small scale investments. The statement also mentions that Post Office accounts
have been excluded from the rule imposed on small savings schemes.

Effects on Manufacturing Sector:

Demonetization of high-value currency notes in November hit the manufacturing
sector as indicated by a private sector survey. The Nikkei India Manufacturing
Purchasing Managers’ Index (PMI) fell to 49.6 in December, the first time it
hit below the 50-mark in 2016, from 52.3 in November. A reading below 50 implies
contraction while one above 50 indicates expansion. Companies saw new work and
output dip for the first time in 2016. In turn, quantities of purchases were scaled
back and employment lowered.
The production for some industries has been impacted by the non availability of
select raw materials (e.g., agriculture- commodities). Industries had cut down
production to adjust for the unanticipated rigger levels of unsold finished goods
across the supply chain. Supply chains had further getting affected by the cash
crunch faced by transportation vendors. Traders and distributors were unable
to pick up stock because of the liquidity crunch.
There was a decline in trade and manufacturing output as industries were knocking
by the hard cash crisis. The Purchasing Managers' Index (PMI) fell to 46.7 in
November from 54.5 in October, recording its sharpest reduction in three years.
A reading above 50 indicates growth and a reading below shows contraction. This
indicates a slowdown in both, manufacturing and services industries. The PMI
report showed also showed that the reduction in inflation in November was due to
shortage in money supply. The growth in eight core sectors
such as cement, steel and refinery products, which constitute 38% of the Index of
Industrial Production (IIP), was only to 4.9 percent in November as compared with
6.6 percent in October.

Impact for IT industry:

This has impacted many industries and more so the IT industry in a positive way.
With minimal cash dependence across industries, there is going to be much demand
for IT adoption. IT industry stands the chance to be positively affected by this
change and will see a huge boost due to this move.

As the country moves towards more cashless way of transacting – new-age

payments like Paytm and Mobikwik, online banking and e-commerce platforms
will see an increased demand in the near future as people will show willingness to
move away from cash. This particularly will benefit IT startups and Fintech
domains that work on online payments that enable technology processes for such
companies.

Companies will realize the need for IT systems to enable the ease of online
transactions for its customers giving IT companies many opportunities. This also
could create key requirements for technology processes for tracing financial
information, eKYC form Income Tax departments. Government initiatives such as
Aadhar, Jandhan will nudge a lot of Fintech companies to enable financial
institutions and banks to adopt these facilities.

With cash transactions facing a sharp reduction, it leads to many alternative forms
of payments like online, debit and credit card transactions. Digital transaction
systems, payment apps and E wallets, plastic money and online transactions using
E banking are clearly seeing a substantial increase in demand. New-age payment
gateways like Paytm has seen a sudden spike in adoption with 250% increase in
application downloads and a 1000% increase in transaction value.

IMPACT OF DEMONETIZATION ON AUTOMOBILE

SECTOR:

The Indian government’s bold move to invalidate large currency denominations in

November has led to a severe liquidity crunch across the nation. In an economy
where trade in hard cash is deep-rooted; this move of demonetization customarily
resulted in a slowdown across several sectors. The automotive sector is among one
such cash-starved sector which is bearing this brunt and coping with this blow. In
the automobile sector, the scrapping of currency had a big effect. The month of
November saw the bookings swooping down by 50%. However the subsequent
month for December 2016 showed even more shocking results for the auto makers
in the economy. The sale of vehicles in India dropped down to a 16 year low. In
December, the Society of Indian Automobile Manufacturers (SIAM) termed this
decision of demonetization as a temporary disturbance in the healthy industry and
has anticipated that it’ll pass quickly but evidently throwing the impact which will
be deeper and might bring down a few hopes. Automobile sales saw their biggest
monthly fall in 16 years in December after Prime Minister.

Two-wheelers:

This decision has affected the manufacture of two-wheelers. The biggest struggle
for two-wheeler sales is taking place in the villages where the bike/scooter
purchases happen majorly via cash transactions, which have now are completely
idle. Considering that only a limited amount of cash withdrawals from ATMs and
banks will take place, most of the customers have decided to wait or drop the idea
of purchasing. While some producers are preparing to stop production for few days
to reduce inventory pressure; there are companies like Honda which is delaying
production. However, other manufacturers like Suzuki Motorcycle India Private
Limited (SMIPL) have come out with cashless schemes to get some hike. Two
wheeler market leader Hero Moto Corp Ltd’s sales during the month of December
declined to 34% to 330,202 units. Motorcycle volumes at Bajaj Auto Ltd dropped
11% to 106,665 units. Sales at TVS Motor Co. Ltd also fell 8% to 153,413 units,
inclusive of scooters’ sales.

Commercial vehicles:

Commercial vehicles including Tractors have also shown a decline of 31%

approximately between the months of October to November 2016. November was
not good for the commercial vehicles and transport industry. Haulage trucks were
hit the hardest in this segment. A huge decline in the used truck market as well, as
second-hand truck sales are done almost entirely in cash.

Passenger vehicles:

Passenger vehicles and private car sales were flat comparatively.

The examples related to sales of passenger vehicles :

Passenger vehicle sales at Mahindra and Mahindra Ltd, market leader in utility
vehicles (UV), dropped 8% to 18,197 units.
Sales at Maruti Suzuki India Ltd and Hyundai Motor India Ltd fell 4% each during
the month.

Hyundai Motor India Ltd (HMIL) domestic sales got down by 4.3% in December
were at 40,057 units as against 41,861 units in the same month in previous years.

Mahindra & Mahindra's sales in the domestic market were down 1.5% to 34,310
units compared to 34,839 in the year-ago period.

Ford India also saw its domestic sales dip by 6.04% to 5,566 units last month as
against 5,924 units in the same month a year ago.

Hinduja Group flagship company Ashok Leyland reported a 12% decline in total
sales at 10,731 units in December 2016.

Country's largest car maker Maruti Suzuki India saw domestic sales in December
at 1,06,414 units, down 4.4% from 1,11,333 units in December 2015.

The overall retail sales were down by 24-25% immediately after the note ban and
the walk-ins at showrooms were down by 40%.

INFLUENCE OF DEMONETIZATION IN THE PHARMA

SECTOR OF INDIA:

It is very well known that cash is used quite a lot in the Pharma business,
particularly as bribe. Big Pharma companies make use of cash transactions in order
to get a hold of the market. Initially, it was difficult for the small Pharma companies
and the entrepreneurs to stand a chance against the big players. But, after the
demonetization act has come into effect, the big companies are struggling to
maintain the flow of cash for bribing their clients. As a result of it, the entrepreneurs
or new players have found a new ground for competition. Demonetization has
certainly provided a lot of advantage to the new Pharma companies.

Another way in which demonetization is going to affect Pharma sector is related to

the rates of medicines. Since most of the transactions now are going to take place
via online and banks, therefore the amount of profit made cannot be kept hidden
by the Pharma companies and stores. So, it will certainly discourage the Pharma
stores to charge more from the customers. In addition, demonetization will also
bring in the habit of maintaining legal invoices as well as bills.

We all know that how Pharma companies and distributors try to keep the doctors
happy by offering benefits on regular basis, usually in the form of gifts, tours, etc.
With the inception of demonetization, this habit of influencing the doctors for
generating prescription will no longer is going to flourish. So, it will certainly
provide the smaller companies to compete in the market in a better way.

Better regulation of the Pharma market has also become possible with the effect of
demonetization. As more fluidity will take place in banking transactions, the
government will be able to have a better regulation over the pharmaceutical market.
This will give rise to a less corrupted Pharma market. At the same time, with
the implementation of new rules and regulations, the prices of expensive medicines
will also slash down, which in turn will benefit the common man.

So, there are tons of benefits associated with the demonetization of the Indian
Pharma sector. With the passage of time, more smoothness will be brought into it.
Overall, it will be advantageous for the customers as well as for the new Pharma
companies.

Demonetisation: How India's textile industry is tottering after note

ban:
Since the turn of the century, Bhiwandi, 30 km north of Mumbai, has wilted against
competition from Bangladesh and Vietnam. Bhiwandi holds more than a sixth of
India’s 6.5 million power looms—machines that manufacture fabric from yarn—
according to this April 2016 Economic & Political Weekly report. A congested city
of about 1.5 million, it was once a key link in India’s cotton economy, which
employs 25 million workers alone, the second-largest employer after agriculture,
according to this 2015 government report.
Bhiwandi has now been further crippled by the aftermath of the November 8, 2016,
scrapping of 86% of bank notes, by value. The Indian textile industry is already
challenged by falling exports, low productivity and rising
prices, IndiaSpend reported in July 2016.
The textile industry, of which decentralised power looms and knitting are the
largest components, contributes to 2% of India’s gross domestic product.
Maharashtra, with more than 1.1 million power looms, is one of India’s largest
power loom hubs, providing direct employment to a million people in Bhiwandi,
Malegaon, Dhule, Sangli and Sholapur.
Bhiwandi is one of the key links in India’s textile supply chain–from farm to loom–
that IndiaSpend visited to investigate the effects of notebandi. Although there are
no consolidated data, we found production cuts, job losses and revenue declines in
an already struggling sector.
Impact of Demonetization on Restaurants:
Initially, restaurants owners were apprehensive of the actual impact of
demonetisation on restaurants, thinking that the curse is spelt for just a few days.
Now, a lot of restaurant owners have begun to fear the consistent dip in footfalls
even days after demonetization.

The cash crunch has hit small restaurants or Quick Service Restaurants (QSRs) the
worst. Since such eateries offer food at budget-friendly prices, i.e. typically under
Rs 500 for two, a severe drop in attendance has been witnessed at these places.

It is not just the small restaurants, but food outlets of all types have been hit by the
effect of demonetisation. Even restaurants in Delhi, the biggest food market, have
seen a crunch. Restaurants in posh Delhi NCR locations like Gurugram have seen
a 15 percent drop in their sales.
From juice stall owners who have been observing a drop of 75 percent in their sales
to an average of 20-30 percent drop in casual and fine dining restaurants,
demonetization has trapped the entire F&B industry that has witnessed a 15-40
percent crash in sales overall.

IMPACT OF DEMONETIZATION ON MICRO FINANCE

SECTOR:

Microfinance is one of the strongest tools available to fight poverty and uplift
millions of Indians to a better standard of living. Microfinance began its journey
by providing credit to the poor. Since 1992, In India, 60% of the population
depends on the agricultural sector for their livelihoods and 30 % of the population
lives below the poverty line. This population in the rural area required micro-
credits for different purposes, such as small one's commercial purpose, agricultural
purpose and personal purpose. Microfinance institutions provide microcredit to
poor people and provide these loans in cash. The demonetization has had a great
impact in the sectors with the greatest use of liquid cash, the lack of availability of
new banknotes has affected the informal high-intensity cash economy of low-
income groups served by microfinance in the weeks following the old Rs 500 and
Rs 1000 banknotes declared illegal. Microfinance institutions, other than banks had
forced their customers to obtain new banknotes or to pay the amounts of their loans
in other legal denominations. Because of this, there was a cash crunch in India. The
Governor of the Reserve Bank of India made it clear that the government was fully
aware of the consequences of its decision and that it was not at all a badly planned
operation, as some have suggested. As often happens, cash is the most powerful
tool for financial inclusion. Anyone can access it directly, without depending on
financial or technological intermediaries looking for transaction fee/charges. Once
you have liquid cash, you can spend 4 it every time, anywhere and in the quantity
you have, without anyone being able to track it. These are the freedoms and
fundamental rights we take for granted. The microfinance industry is cash –
intensive, customers take loans in cash and they repay loans in cash. This has
become a major challenge for microfinance firms. A sudden limited money supply
in the economy has come as a double whammy for microfinance institutions. MFIs
temporarily stopped providing loans to their customers and loan repayments have
also taken a major hit... Even microfinance institutions, which lend to women and
self-help groups of small businesses, have been hit by the sudden withdrawal of
cash. The demonetization. This MFI started to ignore the loan defaults due to
demonetization. This led to a temporary increase in the institutions' unproductive
activities. It is not just the quality of resources that are affected by this chain
reaction, but also the ability to generate income from these institutions is a big
threat. Daily bets and low-income people cannot pay their debts on time due to the
lack of available money. The mobilization of collections is the biggest challenge
for retail customers after the withdrawal of Rs. 500 and Rs. 1000 notes of the Indian
economy. The institutions of Micro-Finance are reluctant to lend money to those
who do not have bank accounts. This measure is taken by them to ensure the timely
collection of payments, but the lack of alternatives is alienating their retail
customers. Although there will not be much impact on MFIs in the long run, the
current shock of the economy is affecting MFI service providers and their
customers. The main alteration observed in this sector is during the collection
cycles. This led to an increase in the quotas and the default values. It is said that
the liquidity crisis observed in these MFIs is not structural, but cyclic. Looking at
the sentiment in the microfinance sector, the general trend reflects that of the big
economy. Micrometer (Q1 2018), a publication of the Microfinance Institutions
Network (MFIN), explains: "Because customer transactions in the microfinance
sector are laborious, Demonetization has had a significant impact on the
microfinance business in several ways, including the slowdown in growth due to
the lack of cash available for several months. “However, the situation has clearly
changed since then, and the sector has returned to preDemonetization levels, even
surpassing in comparison to some indicators.While the level of loans from all
microfinance providers in Q12017 was only 0.2% higher than in Q12016, the 5
outflows of small MFIs increased by 64% those of medium and large MFIs
remained more or less the same.

EFFECTS OF DEMONETIZATION ON WOMEN VENDORS:

• Women vendors who had a bank account and Rs 500/Rs 1000 notes in cash
spent at least one or two hours trying to give away the notes

• Most of these women claimed that they had more trouble withdrawing the
money than depositing it in the bank
• Because of lack of change, the women did not buy new clothes for their
families during the period. They also avoided buying used clothes as not
everyone had enough change.

FEMALE VENDORS:

• 70% Found no change in demand of things they vend despite demonetization

• 68% Stated a decrease in incomes since demonetization

• 50% Had no Rs 500/Rs 1000 notes with them

• 65% Reported a decrease in the family’s income too

• 15% Saw unemployment in family stemming from demonetization

INTERESTING REVELATIONS:

• A bank called the cops, when one of the women vendors in Ramdevnagar who
had collected some money in cash for an impending social function, went to
deposit her cash. The cops and the bank let her go home only after she showed
marriage invitation cards and convinced both that the money was hers

• Two or three women converted their cash into gold by buying jewellery

• Some women took to buying their entire year’s grocery from big stores so as
to use their old notes. This was done to avoid long lines at banks and ATMs

• A rumour that salt and sugar will soon be in shortage led to some women
standing outside grocery stores till 11.30 pm to buy the same.

Impact of Demonetization on Foreign Education

Aspirants in India
• The effect of demonetization has been a burning topic in almost all sectors,
but it also has created a major impact in the field of Foreign Education. The
current cash crunch is has created an immediate effect for students planning to
study in foreign countries, and for those already engaged in studying abroad.
For students already abroad, India’s new monetary policy means that it is now
more difficult to exchange Rupees with financial institutions in foreign
countries.
• The education sector for international students has fallen down miserably due
to this bold move. The past few months have been a doomed phase for all those
who deal with foreign education. The ratio of students opting for overseas
education has seen a dip.
• The cost of overseas education can vary from 10 to 30 Lakhs Rupees per
annum approximately depending on the country and the program of study.
Visa approval processes for international students requires showing proof of
availability of funds for the first year of tuition and living expenses. In order
to deal with this situation, many Indian students use short-term borrowing for
visa approvals and education abroad. Most of the parents prefer 60% cash
transaction by borrowing money to sponsor the foreign education instead of
opting for bank loans with high interest rates.
• Now obviously, due to these reasons there is and there will be a huge downfall
in the students aspiring to go to foreign countries for education. A recent report
has stated the delays in student loan processing in India after the move of
demonetization. Some aspirants are of the view that the situation will settle
down in six months and if that does not happen, the foreign education plan
may get affected for a segment of aspirants. Since unaccounted cash is largely
used for living abroad, the situation will worsen if the current atmosphere
prevails even after six months.
• US and UK being the top destinations for Indian students will see a major fall
with regards to the recruitment of Indian students. India has been one of the
top international students sender and the rank may fall due to this move. “A
recent change in the Government of India policy can negatively affect the
growth of Indian students going abroad. Any major shift in the number of
students coming from India can have serious implications for international
enrollment at many American institutions.”

Demonetisation Effect’s on International Trade:

Demonetisation has given short term shocks to the economy across many sectors.
One of them is the EXIM trade of India. The sceptical economists have argued
that such a shock therapy to reinvent unaccounted wealth has given a shot in
the arm for India’s exports, whereas the imports suffer reduction too,
bringing joy for India’s balance of trade. Let us look at the short term effects of
the demonetisation scheme on Indian exports and imports. We are discussing only
the short term effects because the long term effects on the economy are very
dynamic and depend on multiple factors which cannot be predicted at this nascent
stage.

Demonetisation’s Effect on Exports:

• In the short run, the overall exports may suffer due to lower liquidity in
the market. Lower liquidity means lower purchasing capacity of the
exporters. An exporter would find it difficult to arrange the factors of
production due to liquidity crunch, leading to lower productivity and hence
lower volume of exports. All this is happening in the midst of a situation when
Indian exports became competitive in the international market due to Chinese
slowdown and lower crude oil prices.
• Exports from the primary sectors of the economy such as agriculture, animal
husbandry among others would find it difficult to market and service their
production for exports in the international market despite ample steps taken by
the Government. Liquidity crunch would force them to sell at below market
price in the domestic markets funnelling them into an enigma rural distress.
• The informal middlemen such as traders at the borders who procure the
finished goods for export in the international market will find it difficult to
procure such goods due to unavailability of liquid cash (an economy that
works mostly on black money) and it would be difficult for them to honour
their previous commitments, which would further lower the trust on Indian
markets.
Unavailability of liquid cash in the market will bring the price of rupee
into a stable frame due to lower demand of foreign currency in the
international market. This would be a boon for Indian exports in the long
run, contain inflation in the short run and improve India’s balance of trade in
value terms.

• Lower exports in the short run would enable the competitive economies like
Bangladesh, Vietnam to penetrate deep into the international markets and
 replace Indian exports as a sustainable and committed mode of supply. This
might lower down trust in Indian exports.
• Micro and small industries that thrive on export business would be the worst
hit because many of them are isolated from formal banking channels and the
liquidity crunch is bound to hit them the most.
• Exporters who thrive on procuring finished goods from a least developed
country (LDC) and exporting the same at a higher price after value addition to
a developing or developed country would find it difficult to sustain their
business due to unavailability of cash in the system and thereby lowering down
their ability of procurement.

Demonetization’s Effect on imports:

• In case of imports also, they would fall down because of usual cash crunch.
Currently, the domestic economy would start hoarding cash again (i.e. in
savings mode) and the people would not be willing to spend money freely
which would reduce demand of domestic as well as international products.
• Lowering down of imports would save India of its precious foreign
exchange, hence accelerating India’s foreign exchange currency
basket. This would mean stability of rupee and possible appreciation of the
currency.
• In case there is an appreciation of the domestic currency, it would make our
exports costlier and seize off the tag of price competitiveness of our exports in
the international markets, hence affecting the overall exports from India.
• Decrease in essential imports like plant and machinery would seriously affect
business expansion plans of Indian companies due to unavailability of
technology required to start and expand a business. Note – Plant and
machinery is one of the major component of various factors of production.
• Businesses in India that thrive on procurement of raw materials from outside
and production of finished goods inside India would suffer a major blow in the
short run due to unavailability of cash. Hence, this cash crunch might force
them for a temporary shutdown and lower productivity in the near term.
• Again, those exporters who import finished goods from a least developed
country (LDC) to be further exported to a developing or developed country
 would find it difficult to import the goods due to unavailability of cash in the
market therefore, hurting the entire chain of value addition business.
• The losing sheen of the Indian market and declining imports by India might
push few major business conglomerations outside India because of business
losses to explore other attractive markets. This would be a big blow to ‘Make
in India’ dream.

Demonetisation cost for RBI:

When demonetisation was announced, the RBI and the currency printing presses
were unprepared to replace the volume of the recalled currency notes. The currency
printing machinery had to run overtime to meet the targets.
The RBI spent close to Rs 13,000 crore over the next two years to remonetise
Indian money market in post-demonetisation phase. New notes of Rs 500 and Rs
2,000 were introduced. The designs were markedly different from the recalled
ones. This escalated the cost of printing as it had several new features.
The RBI report says that Rs 7,965 crore was spent in 2016-17 on printing new
notes both old and new denominations. In 2017-18, the amount spent on printing
notes stood at Rs 4,912 crore. The money spent on the printing of notes in post-
demonetisation was very high. The RBI had spent Rs 3,421 crore on printing
currency notes a year ago, that is, in 2015-16 (July to June cycle).
Such high spending on note printing impacted the profit of the RBI which reflected
in the dividend that it paid to the government. The RBI had transferred a surplus
of Rs 65,876 crore to the government in 2015-16.
But when the amount of dividend declined by more than half in 2016-17 when
demonetisation was implemented. The RBI paid a dividend of Rs 30,659 crore. It
went up again in 2017-18 but did not touch the mark of 2015-16. The RBI paid Rs
50,000 crore as dividend to the government earlier this month. Demonetisation
appears to be the spoiler-in-chief for the RBIs profit.

RBI Annual Report: Share Of Rs 2,000 Currency Notes Declines

In 2018-19:
The share of high-value currency notes declined over the last year as the Reserve
Bank of India kept production of Rs 2,000 notes in check. Instead, the focus shifted
 towards production of Rs 500 notes, showed data included in RBI's annual report
for 2018-19. After the announcement of demonetisation on Nov. 8, 2016, the
central bank stepped up production of high-value notes to help monetise the
economy quickly. However, that led to an even greater skew in availability of
currency notes towards those of high value. This was seen as a contradiction since
demonetisation was supposed to reduce the number of high-value currency notes
in the economy, as they can be used for storing unaccounted wealth more easily.
As of March 31, 2019, the share of Rs 2,000 notes in terms of total value of
currency in circulation fell to 31.2 percent from 37.3 percent in 2017-18 and 50
percent in 2016-17. Data on volume of currency notes of different denomination
shows that the number of Rs 2,000 notes actually fell between 2018 and 2019.

Share Of Banknotes In Terms Of Value

In Percent Of Total Banknotes In Circulation

The emphasis has now shifted to notes of Rs 500 and Rs 200 denominations. The value

Denomination 2017 2018 2019

Rs 2000 50.2 37.3 31.2

Rs 1000 0.7 0.4 -

Rs 500 22.4 42.9 51.0

Rs 200 - 2.1 3.8

Rs 100 19.3 12.3 9.5

Rs 50 2.7 2.0 2.0

of Rs 500 notes in the economy is now 51 percent of the total value of currency in
circulation. The share of Rs 200 notes has increased marginally to 3.8 percent. There
are Rs 80,000-crore worth of newly introduced Rs 200 notes in circulation as of March
2019, compared to Rs 37,100 crore in the previous year. In

In terms of volume, Rs 10 and Rs 100 notes in circulation constitute 47.2 percent of all
banknotes in circulation as of March 31, 2019, compared to 51.6 percent at the end of
March 2018. However, in terms of value, both banknotes account for 11 percent of all
banknotes in ciruclation (Rs 2.3 lakh crore) as of March 2019, compared to 14 percent
(Rs 2.6 lakh crore) in March 2018.

Number Of Counterfeit Notes Decline The total number of counterfeit notes detected
has declined to 3,17,384 notes in the year ended March 31, 2019, from 5,22,783 in the
previous year. There was a substantial rise in detection of counterfeit notes of Rs2,000
denomination from 638 in the year ended March 31, 2017, to 17,929 by March 31,
2018. In the year ended March 31, 2019, around 21,847 counterfeit notes of Rs 2,000
were found. In comparison, there has been a 121 percent a rise in the number of
counterfeit Rs 500 notes detected of the new-design to 21,865 banknotes as of March
31, 2019, compared to 9892 notes in FY18.

Counterfeit Banknotes Detected:

Number of Banknotes

CounterfeitNotes 2017 2018 2019

Rs 2000 638 17,929 21,847

Rs 1000 256,324 103,611 717

Rs 500 (New) 199 9,892 21,865

Rs 500 (Old) 317,567 127,918 971

Rs 200 - 79 12,728

Rs 100 177,195 239,182 221,218

Rs 50 9,222 23,447 36,875

Total 762,072 522,783 317,384

Impact of Demonetization and how it boost the union budget:

Government’s preparation of union budget 2017-2018 nearing its climax and its
expectations are being raised. Predictions are made. Whatever may be the
predictions and hope for this budget cannot be analyzed without the impact of
demonetization on it. It has already affected many industries and its financial
impact has mostly been adverse for them. Communications, construction, real
estate, transport , retail, hospitals and other allied sectors have been affected by
demonetization. Many government officials have reported that revenue collection
in the form of tax had came down due to demonetization. All this will be seen in
the union budget. Lets see the adverse effect of demonetization affects the economy
in preparation of budget.
Commercial vehicles and two wheelers shows a decline in sales by over 10% this
year when compared to last year.
Retail and jewellery sector shows a poor performance which affected the collection
of factory duty tax negatively.
The government has also partially postponed its plan to hike wages of its 10 million
employees and pensioners to bring down its expenses.
The sale of stake in big companies made the government to miss the revenue target
of Rs.56,500 crores big margin.
Commercial tax collection wasRs.1267 crores in October, came down to Rs.1167
crores in November and further fall in December as 1094 crores.
The government had set a revenue target of Rs.3300 crores to be collected through
excise duty. However, high authorities have predicted it is most likely to miss due
to liquor consumption in post demonetization.
In the same way, mines department is going to miss the revenue target of Rs.6700
crores for current fiscal years by a huge margin as it has collected only Rs.2900
crores by the end of December.
Own tax revenue collection fall by 11% in December and it may fall further in the
month of January and Febuary.
Infrastructure and other social sectors affect by demonetization, which affect the
revenue generation in making delay in further projects.
Fiscal year’s economic growth rate is expected to go below the previous year
revised estimate of 7.1%. It has estimated by the Government that only 5-10% of
cash will be worthless which raised the question of entire exercise which was billed
as a attack of parallel economy.
The GST (goods and service) tax which affects the business largely, where the
objective is to replace all the tax levied by the federal government and the states
with one central tax.
What the economy has gained financially from this
demonetization:
During the fiscal year, the government and other related efforts have resulted in
overall increased tax collection.
VAT and CST collection till December has been reported to be Rs.8759 crores for
the ongoing fiscal year which is 13.3% higher than the collection during the same
period last year. The fiscal deficit is lying 2% which is comfortably below the
permissible limit of 3.5%.
Another positive effect of demonetization is observed as the state debt to GSDP
ratio which is currently at 14% is well below the permissible limit of 25%.

Demonetization and other schemes boost the union budget 2017-

2018:
Government launched this scheme on November 8th 2016, in order to achieve
several objectives. The major objective was to demolish the black money and
parallel economy. After the concept came in to effect, many common people
started to deposit their money in bank accounts. The main motive of government
is to avoid corruption and make our country free from all ill legal activities. It is
expected that 5lakh crore rupees will be vanished from the system, but later on the
estimate was revised to 2 lakh crore rupees. This scheme would have to make our
country a digital economy. All the government schemes came in to effect in order
to make the people to use all kinds of electronic systems well in order to make
our country a digitalized nation even those who are living in rural areas have to
know the idea of using all such cards like debit and credit card, etc….. Impact of
budget The government could add this amount to the budget and spend on
infrastructure. In this the budget numbers remains unchanged with higher
allocations matched by spending. The government will have expenditure
commission for the next year in the form of pay commission and arrears. There
can be some programmes for low income groups. Another possibility is to increase
the oil price. If it so happened there would be pressure on the subsidy levels in the
financial year 2018. States have to get compensated for GST.
SHORT TERM AND LONG TERM EFFECTS OF
CURRENCY DEMONETIZATION FOR INDIAN
ECONOMY:
The demonetization effort being led by PM Modi in India is appreciable to an
extent but follows positive as well as negative aspects. The aim is to wash the stock
of “black money” out of the economy and get it into the banked and taxable part
of the economy.

“Cleaning of the black money is a very positive step. However, certain things will
happen as a result of this. Transactions will now begin to move to white economy
through the banking system which means there will be surge in bank deposits. Even
savings in terms of deposits will go up.”

Many renowned personalities like politicians, businessman, and so on have huge

reserves of black money either in India or abroad. All the notes of are in high –
value denominations. Now with the news of demonetization they will be forced to
deposit their black money into the banks, after submitting their PAN or Adhar or
Passport number, to get new currencies. This will help the government to catch the
culprits and keep an eye on all the fraud people who are helping them in converting
their black money into white money.

Though this move causes some difficulties for the common people because banks
and post offices do not have sufficient amount of cash. People are facing lot of
problems with the old currencies. They have to make long queues either to deposit
their money or to exchange them. Moreover the ATMs are not updated yet. The
shopkeepers and the others are refusing to take 2000 rupee note because they don’t
have sufficient amount of small denomination currencies. The government is
taking necessary steps to upgrade the ATMs and printing new currencies at a very
high speed so that it reach the people without making any more chaos in the
market.

The sudden stop in the availability of currency has led to a liquidity shock to the
people in the nation. Lack in currency of Rs.500 and Rs.1000 has disturbed
economic activities such as consumption, investment, production, employment etc.
In this context, a number of short term and long terms impacts can be seen on the
Indian economy.

Short-term impacts:

• GDP formation will be effected with the reduction in consumption demand.

Consumption ↓→ Production ↓→ Employment ↓→ Growth ↓→ Tax revenue ↓
• Certain sections of the society namely agriculture sector, small traders,
households, SME’s, daily wage earners etc. will face short term disruptions due
to absence of liquid cash.
• Money supply will reduce in the short-run until the new 500Rs. & 2000Rs. gets
widely circulated in the market.
• Negative impact on disposable income and the consumption patterns of the
people is expected.
• Less currency circulation will reduce inflation.
• Short term recession in sectors like real-estate, construction material, textile,
handicrafts etc.
• Its impact will be seen on farmers as this is the harvest time and farmers
generally deal in cash.
• Rate of capital formation growth will go down as no investments will take place.

Long-term impacts:

• Government revenue will boost up as more earnings would be declared. The

unbanked people will move to banking like Jan-dhan contributing towards
government’s efforts of financial inclusion.
• Demonetization will set accountability in motion as service/sales tax is not paid
by people like local photographers, tailors etc. and thus their income goes
unaccounted.
• Collection of higher taxes will help in nation building like development of
roads, infrastructure, transportation and many others.
• Increase in nation developmental projects will demand more labor and other
skilled manpower which will give rise to employment opportunities.
• It will bring more business in taxation i.e. GST benefits.
• Cash in system will boost educational loans and business loans thus bringing
more opportunities.
• It will lead to better business environment, less corruption and transparency.
• Substantial increase in the demand of Digital transactions system, E-wallets,
usage of plastic money, online transactions using E-banking etc.
• Gold imports will be reduced because of the investments in gold by people as
an alternative to cash deposit in the bank.

The IMF managing director also said that the IMF sees an upswing
potential for India's growth:

On the eve of the Union Budget 2020 on February 1, the Managing Director of the
International Monetary Fund (IMF), Kristalina Georgieva, said, "The Indian
economy witnessed an abrupt slowdown in 2019 due to turbulence in non-banking
financial institutions and major reform measures such as GST and demonetisation,
but it is not in a recession." Talking about the recent growth projections by the
IMF, Georgieva said, "The Indian economy indeed has experienced an abrupt
slowdown in 2019. We had to revise our growth projections, downwards to four
percent for last year. We are expecting 5.8 per cent (growth rate) in 2020 and then
an upward trajectory to 6.5 percent in 2021."
She stated that the primary reason for the slowdown was the turbulence in non-
banking financial institutions. The Indian economy grew 4.5% in September
quarter last year, marking the slowest fall in six years. Last month, the government
data pegged 5% GDP growth rate for 2019-20, the slowest in 11 years. The
Economic Survey for 2020-21 also predicted the GDP to grow between 6% and
6.5% during the financial year 2020-21.
Describing the current scenario, Georgieva said that the ongoing economic
slowdown cannot be described as a recession. She also claimed that the
consumption in India slowed down which in turn led to the overall slowdown in
the economy. Sharing her expectations from the Union Budget 2020, Georgieva
said that the IMF is keen to see what India does to get sound macroeconomic
fundamentals that can pay off in terms of better growth trajectory.
One thing that is important for India is that budgetary revenue has been below
target, Georgieva said, adding, “The country knows that. The finance minister
knows it. They need to increase budgetary revenue collection so they can improve
their fiscal position. I said it's tight on the spending side, but I also want to stress
that there is room to improve collection on the revenue side”

CHAPTER-2.- LITERATURE REVIEW:

P. Patnaik, (2016), stated that the black money is generated through evasion of
taxes on income from lawful activities and money created from illegal activities.
In the absence of steps to control and curb the generation of black money,
Demonetization is a futile exercise. Demonetization has been effected is leading to
a riot such kind of situation in the nation. We demand that the Government ensure
that common people have immediate access to enough money to pay for their daily
needs and health emergencies. Failing which we demand the rollback of
demonetization or suspension of demonetization to enable the common person to
make adequate arrangements for daily needs. The Government role behind it, is to
undertake honest tax administration and not to treat the common person like a
criminal making him/her stand in line and filling forms to access his/her own
legitimate money.
P. Kumar Vijay, (2016), in his study reviewed that the term demonetization is
not new to the Indian economy. The highest denomination note ever printed by the
Reserve Bank of India was the Rs 10,000 note in 1938 and again in 1954. But these
notes were demonetized in January 1946 and again in January 1978, according to
RBI data statement. The Reserve Bank of India manages currency in India and
derives its role in currency management on the basis of the Reserve Bank of India
Act 1934 and a new redesigned series of Rs 500 banknote in addition to a new
denomination of Rs 2000 banknote is in circulation since November 10, 2016. The
decision was taken to curb the illegal use of high denomination currency which
was used for corruption in the country.
Varshith J. R., (2016), in his study has stated that the move to demonetize Rs 500
and Rs 1,000 currency tenders by the union government of India during the year of
2016 was a laudable and historic effort to clean up the decade’s long corruption
and black money. As Indian citizens we all should be proud of the fact that we
elected a government which was capable of taking such brave decision for the long-
term betterment of the country’s economy. In the present economic situation black
money has inflated prices in real estate, gold and a few other sectors, making it a
challenge for a common Indian citizen to invest. However the government’s
attempt to curb black money will significantly lower the prices in the country.
V. Gupta (2016), he points out that the main objective of this move was to curb
the black money, corruption and fake money menace. All the people but those who
were indulged in malpractices welcomed the move. The new currency which
replaced the old one is of denomination of 500 and 2000 notes. Though the people
faced a lot of inconvenience owing to shortage of funds they did not criticize the
government for the move. Even they lauded the currently (2016) Prime Minister of
India for this big move. Prime Minister also addressed the people many times
telling the people that it was a mahayajna and they must offer their own ahuti in it.
Moreover, further said Modi was aware the hardships, people would suffer from
but he sought only 50 days for setting the things right. He jibed at the chief political
leaders who have stashed big amount of money and now joined hand to force
government to take the decision back. The most interesting thing regarding the
demonetization is that people are devising various unique methods for
transforming their black money into white one. Some of these methods are as
follows:-
➢ Depositing money in the accounts of their poor relatives and friends.
➢ Enticing the people with some percentage of money for exchange.
➢ Asking their employees to stand in the long queues in front of Banks and ATMs
for getting money exchanged.
➢ Hiring labors for some Rupees ranging from Rs 500/to 700/for becoming the
part of long queues in front of banks/ ATMs.
➢ Converting black money in to gold.
➢ Paying a few months salaries in advance.
➢ Paying back loans forcibly.
➢ Using their influence / links with bank employees and so on.
Areendam Chanda (2016): noted some shortcomings in terms of dealing with the
shortage. The study described that there were some other criticisms such as the
near term decline in economic growth particularly when the Indian economy was
doing well.
Economic Survey (2016): A number of follow-up actions would minimize the
costs and maximize the benefits of demonetisation. These include: fast, demand-
driven, demonetization; further tax reforms, including bringing land and real estate
into the GST, reducing tax rates and stamp duties; and acting to allay anxieties
about over-zealous tax administration. These actions would allow growth to return
to trend in 2017-18, following a temporary decline in 2016-17.
HDFC Bank Investment Advisory Group (2016): From an equity market
perspective, this move would be positive for sectors like Banking and
Infrastructure in the medium to long term. This could be negative for sectors like
Consumer Durables, Luxury items, Gems and Jewellery, Real Estate and allied
sectors, in the near to medium term.
Mr.Sabnavis and Ms Sawarkar (2016): The RBI will issue Two thousand rupee
notes and new notes of Five hundred rupees which will be placed in circulation
from 10th November 2016. Notes of one hundred, fifty, twenty, ten, five, two and
one rupee will remain legal tender and will remain unaffected by this decision. This
measure has been taken by the PM in an attempt to address the resolve against
corruption, black money and counterfeit notes.
Syamsundar Palanisamy (2016): Considering the importance and the influence
of Indian economy in the global financial markets and the growth rate of India’s
GDP, this article attempts to document the historical importance of the
demonetizations and their impact on the export and import. The study revealed
that, India will achieve a significant growth by adapting the demonetization
strategy and it will create a huge positive impact on the entire economy.
Tax Research Team- National Institute of Public Finance and Policy New
Delhi (2016): The argument posited in favor of demonetisation is that the cash that
would be extinguished would be ―black money‖ and hence, should be rightfully
extinguished to set right the perverse incentive structure in the economy. It is
imperative to evaluate the short run and medium-term impacts that such a shock is
expected to have on the economy. Further, the impact of such a move would vary
depending on the extent to which the government decides to demonetize.
According to Ahram and Karwowski (2018), demonetization is an extreme step
and it does not happen without a purpose or neither happens in a vaccum. However,
to understand the term demonetization, it is necessary to understand what is meant
by money. While there is no universal definition for money, but it is a known as a
mode of payment. It is the lubricant that facilitates exchange. While the
monetization is the process through which money is effectively serving as a
medium of exchange, on the contrary, demonetization connotes the withdrawal of
the currency in circulation in terms of making it legally ineffective in the
transactions. Demonetization indicates that the legally banned currencies cannot
be used for customers or businesses in any form of transactions or be stored for
value in the future.
Reddy (2017) attempts to understand the larger picture of the situation and its way
ahead through three major strands; explanations and analysis of demonetisation,
discussion on the possible alternative that could have been implemented, and
examination of new objective of digitalization.
• Providing valuable reference on cross-sectoral prevalence of corruption,
Desai (2017) tried to put forward an action agenda devised in terms of a consistent
fact-based diagnostic and analytical approach, on the cumulative and cascading
impact of corruption (coming from a legacy of electoral finances) on common
citizen.
• Kapila (2017) investigated impact of demonetisation in terms of rationale, the
aftermath, the short and the long term economic impact, and the social and political
fallout.
• Sharma (2017) addressed various consequences, benefits and drawbacks and
issues relating to demonetisation in terms of its impact on black money, fake
currency issues, industry, business, service class and different segment of the
society.
• Jain (2017) suggested that the move had definitely brought a war on cash and
pushing the objective of digitalization and cashless economy will reap long term
benefits.

CHAPTER 3.- RESEARCH METHODOLOGY:

OBJECTIVE OF STUDY:
• To study the influence of demonetization on Banks operations in the areas of
bhiwandi.
• To find out positive and negative results of post demonetization on banking
operations.
• To determine the impact demonetization on bank employees.
• To examine the challenges and effects of demonetization.
HYPOTHESIS:
 • Null Hypothesis Ho – There is a no significance impact of demonetization
on banking sector within bhiwandi.
• Alternate Hypothesis H1 – There is a significance impact of
demonetization on banking sector within bhiwandi.
DATA COLLECTION:
• PRIMARY DATA : For this study, Primary data has been collected through
questionnaire method and survey method.
• SECONDARY DATA: Secondary data has been collected through internet,
newspapers, articles, etc.
• SAMPLING UNIT:
The Samples are collected from students, working women, businessmen,
housewives, and common people.
• TARGET AUDIENCE: The questionnaire is filled out by the respondents of
the age between 18 – 70.
• SAMPLE SIZE: The total sample size of the study is 100.
• SCOPE AND LIMITATION OF THE STUDY:
The samples are collected within the area of bhiwandi.

CHAPTER 4. - DATA ANALYSIS, INTERPRETATION

AND PRESENTATION:

1. Do you have a bank account?

OPTIONS RESPONSES IN %
Yes 100 100
No 0 0
 Responses

Yes
No

Through the responses from this question, we can interpret that during
the survey all people have their own accounts in bank, ie 100% people
have their accounts in the bank.

2. In which bank you have an account?

OPTIONS RESPONSES IN%
Axis 33 33
HDFC 28 28
ICICI 16 16
Other 23 23
 Responses

Axis
HDFC
ICICI
other

Through the reponses given by this question, we can interpret that 33%
People have their account in Axis bank, 28% people have their account
in HDFC bank, 16% people have their account in ICICI bank and 23%
people have their account in other than this bank. From this response
we can understand that many of the people have their account in Axis
bank.

3. What problems you had faced during demonetization?

OPTIONS RESPONSES IN %
Shortage of cash 27 24
Difficulties in 22 19
depositing cash in
banks
Liquidity problems 25 22
 All 39 35

Responses

Shortage of cash

Difficulties in depositing cash

in bank
Liquidity problems

All

Through the responses from this questions , we can interpret that people
do believe that demonetization has caused inconvenience to them.
People were forced to stand in long queues for hours and even days.
From these responses , we can understand that some pople have suffered
the shortage of cash, some people have suffered liquidity problems,
many of the people have suffered the problems in deposits and many
people have suffered all the problems during demonetization. The
above pie diagram shows that maximum people have suffered all the
problems during demonetization.

4. Do you agree that demonetization has encouraged to make

digital payments?
OPTIONS RESPONSES IN %
Agree 86 86
Disagree 14 14
 Responses

Agree
Disagree

Through this question, we can understand that the use of online banking
has increased after demonetization. In India people were mostly
dependent on cash transaction but after demonetization when tha supply
of money was less , people are resorting to the use of online banking
and digital payments to meet their daily expenses. Therefore, through
these responses, we can say that demonetization has encouraged to
make digital payments.

5. Do you agree that demonetization has helped to remove

black money from India?
OPTIONS RESPONSES IN %
Agree 57 57
Disagree 43 43
 Responses

Agree
Disagree

Through the responses from this question , we can interpret

that 57% people believe that demonetization has helped to
reduce black money, corruption from India and 47% people
are disagree with this question. So from the responses given by
the people , we can understand that more than 50% people have
positive response towards demonetization.

6. Do you think that it is a good idea to go cashless?

OPTIONS RESPONSES IN %
Yes 66 66
No 34 34
 Responses

Yes
No

Through the responses from this question, we can understand

that 66% people believe that demonetization is a good idea for
cashless India , whereas 34% people do not agree that
demonetization is a good idea for cashless India. So from the
above responses, we can understand that there are maxium
positive response for demonetization.

7. Do you think that demonetization helps in growth and

development of Indian economy?
OPTIONS RESPONSES IN %
Yes 58 58
No 42 42
 Responses

Yes
No

Through the responses from this question, we can understand

that more than 50% people think that demonetization helps in
growth and development of Indian economy whereas less than
50% people don’t think that demonetization helps in growth
and development of Indian economy.

8. Through which modes of payment you make payments of your

goods and services?
OPTIONS RESPONSES IN %
Paytm 35 25
Google pay 51 37
Bharat Pay 24 17
Other 29 21
 Paytm
Google Pay
Bharat Pay
Other

Through the responses from this question, we can understand

that after demonetization the use of digital modes of payments
has increased. Various modes of payment are used by the
people to make payments. Through this survey, we can
understand that google pay application is used by more and
more people.

9. According to you , what is your idea for cashless India?

OPTIONS RESPONSES IN %
Internet 16 14
connection in rural
area
Digital Literacy 24 21
Free wifi at all 17 15
public places
 All 59 51

Responses

Internet connection in rural

area
Digital literacy

Free wifi at all public places

All

Through the above responses of this question, we can say that

there are different ideas by different people for cashless India.
From the above responses , we can see that many percentage
of people want that there should be internet connection in rural
area, free wifi at public places and digital literacy to become
cashless India.

10. According to you, is demonetization a success or failure?

OPTIONS RESPONSES IN %
Success 56 56
Failure 44 44
 Responses

Success
Failure

Through the responses given by the people on this question,

we can see that more than 50% people believe that
demonetization is a success for India and other people think
that it is a failure for India. So from the above pie diagram, we
can understand that more than 50% people have responded that
demonetization is a success for India.

IMAGES OF CUSTOMER SURVEY ON

DEMONETIZATION’S EFFECTS:
VISIT TO THE BRANCH MANAGER OF GP PARSIK
BANK:
CHAPTER 5.- CONCLUSION AND SUGGESTION:
The demonetization of the currency (Rs. 500 and Rs. 1000 notes) on 8 th November
2016 was one of the step taken by government of India. This decision way fetch
positive results in the long term. It is concluded that the objective to open the
Pradhan Mantri Jan Dhan Yojna Account has been realized and people used
PMJDY accounts during demonetization period which will change the attitude of
the customers to use physical currency and customers will shift to digital banking
services which will again be helpful for the banking sector as well as customers.
Study also suggests that the step will help the banking industry to maintain adequate
liquidity, minimization of non performing assets, optimization of electronic
banking services which will reduce the cost of products and services of banks and
enhance the profitability of banking sector. This move will also help to reduce fiscal
deficit, control on inflation, lower corruption, improved tax compliance,
elimination of counterfeit currency and sustainable economic growth in long run.
In the “post demonetization” era the currency in circulation is lower than pre
demonetization period. Experts are of the opinion that demonetization has helped
to reduce the circulation of black money to certain extent.
Above reports and data concluded the positive effect of demonetization on black
money. Demonetization has drastically affected the black money existence in Indian
economy and has proven a courageous step to slash various illegal sources and
activities in the country. Exact calculation of black money is not possible but this
analysis surely proved the exit of large amount of unaccountable money from the
system and source of demotivation for wrong practices and black money. Although
it is not the solution of all related problem but it is a successful step to drain the
black money and fake currency from the system and to put a check on black money
related practices in India.

Views on the effects of Demonetization on the Indian economy differ widely and
reflect ideological differences, with those in favour, for whatever reason,
anticipating positive effects, and vice versa. Though the implications of such a
decision would reflect in long-term—the short-term reaction of the stock market to
Demonetization provides early indicators as to what the effects have been or was
anticipated to be.
The results presented in this study, on the basis of the event study methodology,
confirm the proposition that Demonetization have varying sectoral effects. As
expected, the banking and finance sector was the worst affected while the certain
sectors like IT/ITES, Pharma and consumer durables witnessed a windfall gains in
the early days which continued in the event window period. Surprisingly sectors
like Travel & Tourism did not get affected adversely.

Demonetization has been praised as well as criticised on various grounds. There

has been a lot of opposition regarding the implementation of this policy. In the
short run, there have been problems related to liquidity crunch, unemployment,
loss of growth momentum, and a temporary halt to major economic activities. All
this is evident from the data provided by the RBI.

The long term effects of Demonetisation are yet to be ascertained. It is expected

that it can improve the Indian economy in the long run by increasing tax
compliance, financial inclusion, consequently improving the state of the economy.
It can boost the GDP by increasing the availability of funds for lending and also by
reducing transaction costs if the economy moves to digital modes of payments.

BIBLIOGRAPHY:
Newspaper:
Economics Times of India.

WEBILOGRAPHY:
https://www.bankbazaar.com/

https://www.youthkiawaaz.com/

https://www.slideshare.net/

https://www.quora.com/

https://www.xiss.ac.in/

http://euroasiapub.org/

http://www.iipa.org.in/

https://byjus.com/

http://ifmrlead.org/

http://data.conferenceworld.in/

https://www.researchgate.net/

https://www.ijedr.org/

ANNEXURE:
QUESTIONNAIRE FOR BANK.
Name: Designation:
Age: Bank:

1. Do you agree that demonetization helped to remove black money

and corruption from India?
 Agree  Disagree

2. Do you think that demonetization had a positive impact over banking

sector?
 Yes  No

3. Do you agree that there is an impact of demonetization on online

banking?
 Agree  Neutral  Disagree

4. Do you think that demonetization helped the bank employees?

 Yes  No

5. What was the impact of demonetization on interest rate?

 Increase  Decrease  No impact

6. What was the impact of demonetization on the cash flow in the bank?
 Increase  Decrease  No impact

7. What was the impact of demonetization on money lending?

 Increase  Decrease  No impact
8. What was the impact of demonetization on the use of plastic cards?
 Increase  Decrease  No impact

9. Do you agree that government was not prepared enough for the post
demonetization situation?
 Agree  Neutral  Disagree

10. Do you think that demonetization has increased the workload of the
bank employees?
 Yes  No
Signature:

QUESTIONNAIRE FOR CUSTOMERS.

Name: Gender:
Age: Profession:

1. Do you have a bank account?

 Yes  No
2. In which bank you have an account?
 Axis  HDFC  ICICI  Other

3. What problems you had faced during demonetization?

 Shortage of cash  Difficulties in depositing the cash in banks
 Liquidity problems  All

4. Do you agree that demonetization has encouraged to make digital

payments?
 Agree  Disagree

5. Do you agree that demonetization has helped to remove black money

from India?
 Agree  Disagree

6. Do you think that it is a good idea to go cashless?

 Yes  No

7. Do you think that demonetization helps in growth and development

of Indian economy?
 Yes  No

8. Through which modes of payment you make payments of your

goods and services?
 Paytm Google pay  Bharat pay  Other

9. According to you , what is your idea for cashless India?

 Internet connection in rural areas  Digital literacy
 Free wifi at all public places  All

10. According to you, is demonetization a success or failure?

 Success  Failure
Signature: