A study on effect of demonetisation on selected sectors of indian economy

Abstract

Through our work, we have discussed a brief over view of demonetization exercise conducted between Nov 2016 – Dec 2016. We put forward all the major rules, restrictions, changes etc. announced by the RBI and government during the implementation period. Our analysis showed that government is unprepared for such a huge activity and many lapses were found in the implementation aftermath as it caused huge pain for every quadrant of the society. The government release stated that demonetization exercise is primarily to bring out the black money in the economy along with other objectives like fighting terror, gaining fiscal space, reducing interest rates, formalizing informal economy. The RBI nullified the existing 500 and 1000 Notes and mandated to exchange nullified currency with new legal tender available in banks. In to government’s view of Black money is held in cash, various studies pointed out that most of the black money is horded in the form of undervalued stocks, real estate, precious metals, undisclosed foreign assets etc. The Demonetization move targeted only the hoarded cash form of the black money and none of the others. Hence, Demonetization cannot be credited to very significant exposure of black money.