Effects of demonetization in india

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CHAPTER 1
INTRODUCTION
The decision of the Government to demonetise Indian currency especially the notes of Rs500
and Rs1000 caused a quake in the lives of Indians on 8thNovember 2016.Everywhere there
the talk of demonetisation in the country was apparent. There was appreciation as well as
criticism of the decision of the government. The central motive behind this big move was
curbing black money, terror funding and stopping the use of fake currency available in the
market. This article looks at the basics of demonetisation, its history, the Indian experience
and its effects. Demonetisation refers to the act of stripping a currency unit of its status as
legal tender. It occurs whenever there is a change of national currency. The current form or
forms of money is taken out of circulation and retired, often to be replaced with new notes or
coins. Sometimes, a country may completely replace its old currency with new currency.
There are various reasons for demonetisation of their local units of currency, they are:
 to combat inflation
 to combat corruption and crime (counterfeiting, tax evasion)
 to discourage a cash-dependent economy
 to facilitate trade
1.1 THE INDIAN EXPERIENCE:
The 1st demonetisation was when Rs1,000, Rs5,000 and Rs10,000 notes were taken out of
circulation in January 1946, a year and a half before independence from the British.
Introduced for the 1st time in 1938, the ₹ 10,000 notes were the largest currency
denomination ever printed by the Reserve Bank of India. The ban really didn't have much
impact, as the currency of such higher denomination was not accessible to the common
people. However, the notes were reintroduced in 1954.
In the early 1970s, the Justice Kailas Nath Wanchoo committee, a direct tax inquiry
committee set up by the government, suggested demonetization as a measure to unearth and
counter the spread of black money. However, the public nature of the recommendation
sparked black money hoarders to act fast and rid themselves of high denominations before the
government was able to clamp down on them.
One year after the Janata Party coalition government came into power in 1977, party leader
Morarji Desai was more bullish about cracking down on counterfeits and black money. The
High Denomination Bank Notes (Demonetisation) Act was brought into force on 16th
January, 1978 and deemed the Rs1,000,Rs 5,000 and Rs10,000 notes illegal for the second
time.

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1.2 OBJECTIVES:
1. To study the conceptual framework of demonetisation in India.
2. To critically examine the effects of demonetisation on various sectors.
3. To study the pre and post effects of demonetisation on Indian economy.
1.3 RELEVANCE OF THE STUDY:
Demonetization, which was done to crack down on black money, significantly affected
India's GDP growth, but with almost all of the money now being accounted for there are
doubts if the government's action was effective. Demonetization’s long-term impact on the
Indian economy is still debated. The government, meanwhile, has defended itself with the
Finance Minister Arun Jaitley suggesting that just because the money is back with the RBI
does not mean that black money hoarders have not been held accountable.
RBI data states that out of Rs15.44 lakh crore worth of currency notes that were taken out of
circulation, Rs15.28 lakh crore have returned to the system and around Rs16,000 crore is yet
to be deposited back to banks. RBI report also says that about 8.9 crore units of the
demonetized Rs1, 000 notes worth Rs8, 900 crore, had not come back into the system. There
were 632.6 crore pieces of Rs1, 000 currency notes in circulation on the day of
demonetization. This reveals that just 1.4 per cent of Rs1000 notes did not return after
demonetization. Moreover, the demonetization was implemented to curb fake currencies and
terrorist funding’s. The detailed analysis about the previous mentioned factors are discussed
in this paper.
Demonetization is a financial decision by Ministry of Finance and announced by Prime
Minister who promised to curb black money and demonetization can proved to be the
solution. This paper thoroughly analyzes the above statement against demonetization.
This paper involves three important parts. Firstly critical analysis of the frame work of
demonetization in which the government awareness about the then economic state of the
country and the timing of demonetization is discussed. Secondly the effects of
demonetization involving the worst hit sectors to least hit sectors and finally pre and post
effects of demonetization in which the before and after scenario of demonetization is
discussed.

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1.4 SCOPE OF THE STUDY:
The following are detailed sector –wise short to medium term analysis of demonetization on
various sectors1.
 Agriculture: The short term impact of demonetization was feared that sowed
acreage would be reduced for want of enough seeds in time and could highly impact
production in 2016-17.Cash is the primary transaction mode in the sector and in
agricultural dependent states like Uttar Pradesh, Punjab, Madhya Pradesh,
Maharashtra, Kerala, Odisha and Gujarat where cooperative banks extend finance
to farmers during the sowing season, were debarred to take deposits or exchange the
demonetized currency. Credit demand became high as sale, marketing, transport, and
distribution of ready produce to wholesale centers or mandis, is dominantly cash-
dependent. The most affected were the marginalized farmers having negligible
landholdings
 Automobile: Automobile industry especially in states of Gujarat, Punjab, Delhi
and Northeast region was much affected with the implementation of
demonetization. The generally seen slowdown during the months of November and
December in the automobile sales became a lot more prominent as consumers started
delaying purchases due to the liquidity crunch and in anticipation that a rate cut may
happen in the near future. The impact in this industry has been more witnessed in the
rural areas and semi urban areas where most of the transactions took place in cash. So,
in totality this industry faced a tremendous slowdown because of demonetization
 RealEstate: The real estate sector since long considered a safe haven for black
money showed poor performance with developers reporting 50% drop in sales in the
last three months. Genuine buyers are pinning their hopes on property prices falling
and interest rates further being reduced post demonetization. Since buying or
selling a property in the secondary market is dependent on liquid cash, it is the hardest
hit where sales have virtually dried up.
 Aviation: According to Economic times, Indian carriers have reported a drop of
7-10% in overall sales after the announcement of Nov 2016. The domestic sector
is more impacted as compared to the international sector, due to the previous planning
1
Source-Ministry of Statistics &Programmed Implementation, Second Advance
Estimates of National Income 2016-17[as on 28 February 2017]

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and payments. But the aviation industry showed an immediate surge in the
domestic flyers where there were 95.5 lakh domestic flyers, during the month of
December 2016. The main reason being the old currency notes could be used
to buy airline tickets. According to Domestic Air Traffic Report Jan 2017
around 22.45% passenger growth was recorded by the domestic airlines.
Thereby, we can conclude that the demonetization had a minimal effect on the
aviation sector.
 Travel and Hospitality Industry: Travel and Hospitality industry faced a
tough time since most of the pay-in-cash-only clientele either changed their travel
destinations from International to domestic tourism or cancelled their bookings
altogether. Most of the hotels showed a drop of 60% in hotel bookings. The wealthy
and luxury travelers trimmed their budgets due to cash crunch. Weddings were called
off or post phoned, sometimes destinations were changed so leisure segments like
hotel banquets and high-end restaurants felt the pinch on cancellations.
 Banks:The banking industry benefitted with a surge in deposits allowing banks to
lower the cost of funds and better margins. Increased focus on cashless transactions,
benefitted payment banks and digital wallets in terms of value and volumes.
However, NBFC including gold financing companies and micro-financing
companies that make disbursements and collections in cash witnessed a negative
impact on their business. So, in totality although the banking system became plush
with money the financial services sector was at a loss of consumers.
 Consumer Durables: The market for white/brown goods operates 70-80% on
cash, thereby affecting volumes due to cash shortage after demonetization. Consumer
durables-White Goods, FMCG, etc. had a near-term negative outlook– White Goods,
FMCG, etc. had a near-term negative outlook as consumers‟ cutback on discretionary
spending. Significant number of sales that happened through cash in these sectors had
a negative impact. The traditional trade wholesalers and kirana stores in the
unorganized sector suffered losses and had to opt for cashless transactions through
digital wallets or card swipe
 Healthcare:In the healthcare sector, the worst hit is the medical tourism industry,
since patients had come from outside India and were unable to get their treatment
done due to financial cash crunch. Even the pharmaceutical industry had been
affected due to the transactions which are done on the basis of cash.

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1.5 REVIEW OF LITERATURE:
Literature in any field gives a glimpse of the direction that the previous studies have provided
regarding a particular context. Study of related literature implies locating and evaluating
research reports as well as reports of the casual operation and opinion that are related to the
individual’s planned research project. It also takes into account the advantage of the
knowledge, which has already been accumulated in the past as a result of constant human
endeavour. A review of related literature gives the scholar an understanding of previous work
that has been done in his/her fields/area of research and what still remains to be done. The
related studies in any field forms the foundation upon which future work will depend. Review
of related literature makes the investigator fully aware with the previous work that has been
done. It also provides an opportunity of gaining insight into the method, measures, subject
and approaches employed by the other researchers. A careful review of research, journals,
books, dissertations, thesis and other sources of information about the problem to be
investigated is one of the important steps in the planning of any research studied.
This topic covers various ranges of studies revealing the facts and figures of demonetization.
The followings are among them:
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.
Desai (2017) Providing valuable reference on cross-sectoral prevalence of corruption 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.

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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.
Dhingra (2017) argued that demonetisation is a powerful instrument of state policy that
works like a divine ‘Brahmastra’ and has to be used with utmost care and caution.
Vaidyanathan (2017) provided a vivid perspective on estimation of black money and
historical analysis of unaccounted money in India.
Singh (2017) highlighted the seriousness of black economy situation in India.
PratyushChandra (2017) argued that the demonetization has long-term benefits. Parallel
cash-based economies in India cushioned the impact of the global crisis at the national level,
acting as clogs that minimized the strains of the impact, is a strange truth. However, in order
to sustain a higher growth these economies with their particularities will have to be
incorporated into the formal system, and their comparative advantages annulled through their
generalization. What we see today is the neoliberal urge to mainstream and generalize
informality and make it a ground for systematic capital accumulation, with concentration and
centralization as its vehicle. The moves like demonetization become effective instruments.
But this would destroy the clogging effects of local and parallel economies. Hence, it would
eventually minimize their ability to cushion against global vulnerabilities.
1.6 RESEARCHMETHODOLOGY:
Research methodology is a systematic approach in management research to achieve pre-
defined objectives. It guides a researcher during the course of research work. Methods and
techniques stated in research methodology save time and labor of the researcher as researcher
know how to proceed to conduct the study as per the objectives.
There are two types of data used for the research of this topic. These are the following:
 Primary data: The data collection for this topic involves questionnaire as primary
data.
 Secondary data: secondary data includes published research papers, news reports,
newspapers, journals and data from official Indian government sites like Ministry of
Statistics &Programmed Implementation and R.B.I (Reserve Bank of India).

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1.7 DESIGN OF THE STUDY:
The present research is designed to study the demonetization and its effects in India. This
descriptive type of research involves relationship between cause of demonetisation and its
effect on various sectors.
Population: The entire urban population of Bhubaneswar is my universe for the descriptive
research on demonetization and its effects in India.
Sample: A random sample of 50 responses was taken for the present study. All the subject in
the present study comes under the age group of 18-40 year with minimum educational
qualification is graduation. The sample is taken from various sectors of people like student,
employed, unemployed and people related to business.
1.8 LIMITATIONS:
The present study conducted with the following limitations
 The respondents of this study majorly belong to students.
 All the subjects in this study come from urban background.
 Further this study was limited to young adults aged 18-25yrs which may not reflect
the experience and perceptions of older or younger individuals.
 All the limitations of primary data is applicable here.
1.9 CHAPTER PLAN:
1. Chapter1: Introduction
2. Chapter2: Demonetisation: An Overview
3. Chapter3: Demonetisation: Its Effects On Selected Sectors
4. Chapter4: Pros And Cons Of Demonetisation
5. Chapter5: Data analysis and interpretation
6. Chapter6: Finding, Suggestions And Conclusion
*****

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CHAPTER 2
DEMONITISATION: AN OVERVIEW

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CHAPTER 2
DEMONITISATION:AN OVERVIEW
The decision of the Government to demonetise Indian currency especially the notes of Rs500
and Rs1000 caused a quake in the lives of Indians on 8thNovember 2016.Everywhere there
the talk of demonetisation in the country was apparent. There was appreciation as well as
criticism of the decision of the government. The central motive behind this big move was
curbing black money, terror funding and stopping the use of fake currency available in the
market. This article looks at the basics of demonetisation, its history, the Indian experience
and its effects.
2.1 INSTANCES AROUND THE WORLD:
1. Nigeria:
In Nigeria during the government of Muhammadu Buhari in 1984, a new currency was
introduced and banned the old notes. But, the debt-ridden and inflation hit country did not
take the change well and the economy collapsed.
2. Ghana:
In 1982, Ghana abandoned their 50cedis note to counter tax evasion and empty excess
liquidity. This encouraged the people of the country to support the black market and they
started investing in physical assets ultimately making the economy weak.
3. Pakistan:
From December 2016, Pakistan phased out the old notes as it brought in new designs.
Pakistan legally issued the tender one and half years earlier and therefore, people had time to
exchange the old notes and get newly designed notes.
4. Zimbabwe:
Zimbabwe used to have $100,000,000,000,000 note. Yes, one hundred trillion dollar note!
When President Robert Mugabe announced to fight inflation through this ridiculous value
notes the Zimbabwean economy went for a toss. Post demonetisation, the value of the trillion
dollar note dropped to $0.5 dollar and also they were put up on eBay.
5. North Korea: The demonetisation in 2010 in North Korea left people with no food and
shelter. With a view to banish black market, Kim- Jong II announced a reform that knocked
off two zeros from the face value of the old currency.

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6. SovietUnion:
Mikhail Gorbachev ordered to withdraw large-ruble bills from circulation to counter the
black market. The move wasn't received well by the citizens which resulted in a coup attempt
which brought down his authority and the led to Soviet breakup.
7. Australia:
Australia became the 1st country to release polymer (plastic) notes to stop widespread
counterfeiting. As the purpose was to replace paper with plastic where only the material
changed, it did not have any side-effects on the economy.
8. Myanmar:
In 1987, Myanmar's military invalidated around 80% value of money to curb black market.
This decision resulted in an economic disruption which in turn caused mass protests that
killed many people.
2.2 INDIA SINCE DEMONETISATION2
:
The unique experiment with demonetisation, announced on November 8, 2016 by the Prime
Minister has established that the Central Government is serious about tackling the menace of
corruption. The relentless fight against corruption was further reflected in the Union Budget
of February 1, 2017 through restrictions on funding of political parties and on cash
transactions; and the current year’s budget (2018) includes some extensive provisions to push
infrastructure for digitalization as well. The experiment of demonetisation by the Government
has largely been successful in educating the masses about the benefits of electronic payments
and digitalization.
Initially, broadly, demonetisation of high currency notes had a two-fold objective – first,
choking the funding channels of militancy and terrorism from across the border and to fight
corruption. Since then, in continuing the focus on corruption, government has placed
emphasis on digitizing India.
The amount of demonetised notes which subsequently returned to the Reserve Bank of India
(RBI) between November 8 and December 31, 2016 strongly demonstrate that corruption is
rampant in the economy. The eradication of corruption is not only a social necessity but also
2
The author benefittedfromextensive discussionwithDevi Prasad, K. K. Sharma, S. Ananth, C.L.
Dadhich, R. Gandhi,Sharad Sharma, ShekarViswanathan,and S. A. Sampathraman. The author
also benefittedfromparticipantsat EntrepreneursOrganisation,Hyderabad (November24, 2016);
Associationfor Information Technology,Bangalore (November27, 2016); GOPIOInternational
Convention,Bangalore (January 6, 2017); ISB Mohali (March 27, 2017) and IMF, Washington
(November1, 2017). Research assistance by SomyaSoti and Ajay Pai is gratefullyacknowledged

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Has strong economic rationale. The war against the malaise of corruption has to go beyond a
series of surgical strikes and needs precise planning with scenario analysis, and then flawless
execution. In that respect, demonetisation of November 2016 deserves a contextual review
wherein the government may consider strengthening efforts to eradicate corruption from an
exclusively tax-oriented approach to a broad-based approach. Prevention of corruption needs
strong policy deterrence which requires effective administration, and technology-based data
processing to generate actionable intelligence.
Understanding demonetisation as a policy instrument requires analysing its effect on
performance of the major macroeconomic indicators. The trend from such analysis in the last
one year since November 2016 indicates that economy is recovering. The immediate pain in
terms of non-availability of high value currency notes could have got reflected in reduction of
output in agriculture, which might have in turn spilled over to industry and services.
Due to short-term nature of the liquidity constraint, it was expected that consumption might
not get impacted, as also business investment which is largely based on overall climate and
interest rates.
In the initial months, demonetisation was expected to lead to lower conspicuous consumption
and real estate activity which could result in suffering of residential investment, impacting
nearly 300 industries which provide inputs in housing sector. Therefore, India’s growth rate
in short run was a matter of concern. The microfinance institutions, in the absence of high
denomination notes, could have suspended some of their operations for a short time. In the
long run, implications were uncertain. On one hand, confidence in efficient management of
the economy would have led to a positive effect while a shock strike at unaccounted economy
could have led to shrinkage in production, especially in the informal sector including micro,
medium and small enterprises.
2.3 CORRUPTION AND ECONOMICGROWTH:
Corruption, in socio-economic terms, has both direct and indirect costs. While the direct
costs are well known in terms of scandals and loss of confidence in administration, the
indirect costs are debilitating causing low growth and higher income inequality. It can also
erode the ethical standard of citizens. Corruption undermines government’s ability to deliver
economic growth and adversely affects a number of variables like macro financial stability,
investment, human capital formation and productivity. It weakens government capacity to
raise revenue and perform its core functions by diluting culture of complaints and increasing
tax evasion. It inflates costs in public procurement process and undermines its quality. It can
lead to distrust of government policy which if becomes pervasive can lead to violence and

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conflict with social and economic implications. It also impedes conduct of budgetary and
monetary policy, weakens financial oversight and hurts inclusive growth. Thus, corruption
has significant impact on macro-economic stability and sustainable economic growth (IMF,
2016 and Baum, 2017).
The general costs also rise in the economy as citizens, manufacturers, and industrialist’s
factor corruption in the pricing model. The uncertainty for firms in turn hurts growth of
economy. Social and environmental concerns are relegated, and enforcement of
environmental regulation suffers leading to more pollution and over extraction of natural
resources which also has health implications. It can lead to political instability, conflict and
policy paralysis as had happened in the case of mining sector in India.
In India, black money is estimated between 10 and 30 per cent of official national income
(Singh, 2016). The important thing is to retain confidence in the country’s institutions and
currency as money is all about trust. Illustratively, in the island of Yap, in Pacific Ocean, the
currency called fei was of large 12-feet diametric stone wheels. When a fei of a wealthy man
got washed away into the ocean, the policy makers of Yap decided that as the loss was due to
a natural calamity, the economy would continue functioning normally. Even today stone
money is valued in Yap3.In another illustration, not too long ago, in the Kurdish dominated
area of Iraq, Swiss Dinar, without any Government support or that of any central bank,
continued to function normally for more than a decade from 1993 to 2004, simply based on
trust and faith4.
2.4 ESTIMATES OF BLACK MONEYIN INDIA:
There hasn’t been much uniformity in methodological stance and certainty in estimation of
black money in any economy. Shadow economy runs parallel and has numerous inevitable
linkages with the white economy, so there exists a wide variation in the figures reported.
Some of the popular approaches to estimating black money are input/output method,
monetarists’ approach of National Accounting System (NAS), survey approach and fiscal
approach. According to Government of India (2012), in India, various studies have indicated
that only 6 percent or so of India’s black market wealth is actually kept in cash.
Some of other popular estimates given are:
• Kaldor’s estimates followed a fiscal approach that focused on quantifying non-salary
incomes - 3 to 10 percent of GDP from 1960-61 to 1976-77.
3Mankiw, 2016
4DisownedCurrency: The odd case ofIraqi SwissDinar. The blog of J P Koning,Moneyness,May
27, 2013

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• Chopra’s estimate focused on tax evasion from non- payment/underpayment of excise duty,
sales tax, and custom duties, substituting agricultural income for non-agricultural
income1960-61 at 6.5 percent of GNP and for 1976-77 at 11.4 percent of GNP.
• The Wanchoo Committee, 1971 popularly known as The Direct Taxes Enquiry Committee,
estimated assessable non-salary income evaded from tax for 1961-62 at Rs. 811 crore. After
required adjustments from Income Tax Act, revised estimates were at Rs. 700 crore for 1961-
62 and Rs.1, 000crore for 1965-66.
• Gupta and Gupta followed transaction-income approach for their estimation from 1967-68
to 1978-79 and came up with a substantially higher value ranging from 25 to 50 percent of
GDP.
• In Rangnekar’s estimate, tax evaded income estimates were calculated to be around Rs.1,
150crore in 1961-62, and Rs.3, 080 crore in 1969-70.
• Estimates provided under commissioned studies conducted by National Institute of Public
Finance and Policy (NIPFP) came out to be 20 percent of GDP in 1980-81, and 42 percent of
total GDP between (2008-09 to 2011-12).
2.5 NEED FOR DEMONETISATION:
The total currency in circulation as on March 31, 2016 was Rs.16,415 billion of which notes
of Rs.1,000 denomination account for 38.6 per cent (Rs.6,326 billion) and Rs.500 account for
47.8 per cent ( Rs7,854 billion). The importance of Rs.500 had been increasing over the
years, from 4.1 per cent on March 31, 1990 to 47.8 per cent on March 31, 2016. Similarly,
the share of Rs.1, 000 note had increased from 1.7 per cent in 2001 to 38.6 per cent in 2016.
The total amount of Rs.500 and Rs.1, 000 notes amounted to Rs.14, 180 billion as compared
with India’s GDP of Rs.1, 35,761 billion in 2015-16 or about 11.5 per cent of GDP,
increasing nearly threefold from 2.8 percent in 2001. The history of Rs.1, 000 note is
interesting. It was first introduced in 1938 and then demonetised in January 1946. It was re-
introduced in 1954 and again demonetised in 1978 only to be reintroduced in 2000. The
Rs.500 note was introduced in October 1987-88.
Demonetisationof1946:
In 1946, the currency notes of Rs.1, 000 and Rs.10, 000 were demonetised. The higher
denomination notes were not accessible to common people at that time. So, the currency ban
did not have much impact on the common people and the Indian economy. Furthermore, it
severely impacted functioning of State Bank of India as there were only 71 bank offices at
that time. The bank’s profits also took a hit and they were low as compared to that of
previous years. The stock market rallied for two continuous years post the demonetisation
reflecting impact on economic activity.

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In 1978, Government demonetised Rs.1000, Rs.5000 and Rs.10,000 notes. Similar to the
recent episode, this action was kept confidential and yet an ordinance was issued to carry out
the exercise. However, that ordinance contained sufficient measures for the exchange of the
old notes and clearly stated the power of central government in framing of the rules. There
was a political angle involved in 1978 demonetisation as the then newly formed Janata
government wanted to target some of the alleged corrupt elements in the government. The
impact of currency ban on common people was limited as the demonetised notes formed only
a small portion of the total money supply.
The exercise of demonetisation was carefully crafted as observed by the Prime Minister in
his televised talk on November 8, 2016 where he mentioned about completion of festive
season and need for strong measures to defend India from menace of counterfeit notes and
corruption. The government, given the constitutional provision of right to life, permitted use
of old notes in government hospital for medical treatment and buying medicine with doctor’s
prescription, and making payments for milk and utility bills. To ensure convenience and
freedom of travel within the country, purchase of tickets for railway, bus and air travel were
permitted with old notes, and toll on highways was exempted. Similarly, grace period was
offered on purchase of petrol, diesel, and gas and LPG gas cylinders for cooking. To ensure
comfortable international travel, use/exchange of old notes at international airports was also
permitted. In view of sowing season, old notes were permitted to be used for purchase of
seeds. For general convenience payment of school fees as well as provisions for marriage
functions were also made. The Post Offices which have a significantly larger presence in
rural areas than commercial banks were also permitted to exchange old notes. To address the
emerging issues, given that 86 percent of the currency was demonetised, 126 amendments
were introduced in the course of 51 days.
2.6 FRAMEWORKOF DEMONETIZATION:
On the evening of 8 November 2016 India's Prime Minister Narendra Modi made an
announcement that surprised the nation: From midnight onwards, the country's two largest-
denomination notes, worth 500 and 1000 rupees, would be “demonetized”, or withdrawn

16
from use. In their place, a redesigned 500 rupee note and a new 2000 rupee note would be
introduced.
According to PM, the policy had three goals:
1. Tackling corruption
2. Undermining counterfeiters
3. Punishing hoarders of undeclared income, popularly referred to as “black money”.
Compounding the sheer logistical challenge required to replace such a large amount of cash
was the fact that a significant proportion of the new notes had yet to be printed at the time of
the announcement, causing weeks-long cash shortages, which in turn led to significant,
government-mandated restrictions on cash withdrawals. 90% of all transactions in India are
conducted in cash, in spite of these challenges, public reactions to demonetization were
initially broadly positive. The policy’s perceived decisiveness struck a chord with the
electorate. It appeared there was a consensus that innovative, perhaps radical anti-corruption
policies were needed, and that this consensus was so strong, it outweighed even personal
inconvenience and potential economic losses. Gradually, however, the public mood began to
change. Agricultural associations complained that farmers across India were unable to sell
recently-harvested summer crops or purchase seeds for the upcoming winter sowing season.
Opposition parties claimed that some members of Modi's BharatiyaJanata Party (BJP) had
received advance warning of the decision, allowing them to save at least parts of illicitly
accumulated cash. Such criticism led to a number of modifications to the policy mechanics of
demonetization which, in turn, led to accusations that the government had failed to think
through the policy properly.
2.7 POLICY MECHANISM:
The policy mechanics of demonetization were governed by two notifications, issued by
India's Ministry of Finance (MoF) and the Reserve Bank of India (RBI). Both were issued
shortly after Prime Minister Modi had announced the policy on national television on the
evening of 8 November 2016 and came into effect the same day at midnight. Technically,
demonetization meant withdrawing the legal tender character of all existing 500 and 1,000
rupee notes and introducing new notes valued at 500 and 2000 rupees. The two notifications
specified how this process was to be regulated, including over-the-counter exchanges of old
notes, and daily and weekly limits for withdrawals at bank counters and cash machines.
Noteworthy about the way demonetization was communicated is the lack of insight
government bodies offered into the reasoning behind it.

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The RBI notification, for example, did not provide any pointers towards the rationale behind
demonetization – in spite of it being the government body that had officially recommended
the policy (RBI 2016). The extent of the RBI’s role in shaping demonetization, in fact, caused
significant discussion, including allegations that the policy had originated with the Prime
Minister's office rather than the RBI, reducing the central bank's role to “rubber stamping”.
Some commentators have argued this damaged the long-term credibility of the 3 RBI as an
independent body and may further have violated Indian law (Kapadia, 2016 and Kumar,
2016). The little information provided by the MoF notification similarly lacked dispassionate
observations and clearly defined policy goals (MoF, 2016a).
One issue that dominated the Indian public discourse on demonetization was its evolutionary
nature: Between 8th November and 30th December, the last day to exchange or deposit old
notes, the RBI issued 50 notifications to guide and regulate the process and to remind the
actors, namely public and private sector banks, of their legal obligations. Some of these were
of an advisory nature but a large proportion provided substantive changes to the workings of
the policy.
The MoF, for its part, issued 19 notifications during the same timeframe, some reflecting RBI
notifications and others introducing additional policy changes. The number of modifications
was so large that the RBI created a website entitled “All you wanted to know from RBI”,
referencing the 57 notifications and 27 press releases (as of 1 March 2017) that the central
bank had issued on demonetization (RBI 2017). From the public's perspective, the most
visible changes to the policy mechanics of demonetization concerned exchanging and
depositing of old notes, as well as caps on the availability of new notes. By the end of the
year 2016, the RBI had issued nine notifications on the exchange and deposit process and five
on cash withdrawal limits. A significant set of RBI and MoF notifications concerned the
agricultural sector, in which nearly half of India's population is employed (World Bank
2013), addressing complaints that farmers were unable to purchase supplies for the ongoing
sowing season. The words of former Prime Minister Manmohan Singh, characterized by
“monumental mismanagement” (Rath 2016), these frequent and often sudden policy changes
had a direct impact on the population. The amount of old currency people were allowed to
exchange over-the-counter, for example, was initially set at 4,000 rupees, increased to 4,500
rupees five days later and reduced to 2,000 rupees four days after that. The RBI stopped over-
the-counter exchanges altogether on 24 November.

18
2.8 POST DEMONETISATION:
After that date, people only had the option of depositing old notes in their bank accounts.
Compounding the existing confusion about the timeframe during which old notes could be
exchanged or deposited was the fact that the RBI introduced separate rules for District
Central Cooperative Banks (DCCBs) and Primary Agricultural Credit Societies (PACS), the
primary financial institutions used by the rural population. From 14 November onwards,
DCCBs and PACS were only allowed to issue new currency but not to exchange or credit old
notes. Two high-profile examples are the India against Corruption Movement (IAC) in 2011
and the BJP's success in the 2014 general elections. IAC was one of the biggest popular
movements in 21st century India, lobbying for the introduction of an ombudsman-like anti-
corruption authority, the Lokpal, literally 'caretaker of the people'. While IAC's demand was
fulfilled in 2013 under the aegis of the Indian National Congress, the ruling party at the time,
it was Congress' opponent the BJP that successfully positioned itself as tough on corruption
in its campaign for the 2014 general elections, contributing to the party's resounding electoral
win. In the context of demonetization, it is important to note that Modi did not just make
vague assurances during the campaign but specifically promised to “bring back each and
every penny deposited abroad by Indian citizens,” announcing his government would deposit
a percentage of the money recovered in the accounts of “honest” tax payers (Outlook, 2014).
As with many major government programmes in India, it was Prime Minister Modi himself
who announced demonetization and acted as the policy's main advocate. It is crucial to
understand to which extend the policy was tied to Modi as an individual. Although
government communications highlight that the RBI had recommended demonetization, it was
the Prime Minister himself who was portrayed as the primary force behind the policy. While
Modi is certainly not the first Indian Prime Minister to be the public face of a major
government initiative, the reliance on a single individual for a policy with such wide-ranging
implications only furthered allegations that demonetization was a political ploy rather than a
serious, well-planned anti-corruption initiative. Consequently, the move was heavily
criticized and challenged by opposition parties during the parliamentary session between 16
November and 16 December 2016.1 Modi's absence from parliament enabled opposition
parties to effectively bring the legislature to a stand-still, asking the Prime Minister to
formally face parliament and address concerns about the policy's appropriateness and
efficacy. More importantly, however, the focus on Modi portrayed corruption as a problem

19
that requires first and foremost the decisiveness of one committed individual, rather than the
problem-solving and analytical skills of a larger team.
The Indian parliament meets in three sessions every year to conduct legislative business. The
session between February and May is called Budget session; the session between July and
September is called Monsoon session and the session between November and December is
called winter session. 5 festival of credibility”. Only if all citizens acted together, Modi
argued, could India eradicate the “spectre[s] of corruption and black money” that had “spread
their tentacles” and undermined poverty alleviation and the country's place in the global
economy. While the government had shown its commitment to tackling corruption by taking
the “strong and decisive step” of demonetization, “the common man” was the real owner of
this fight. Modi's rhetoric played well with the electorate but has the potential to create
serious impediments for future anti-corruption programmes: Rather than strengthening
governmental checks and balances, the Prime Minister created an “us-vs-them” narrative,
with “us” being the righteous and “them” the corrupt. By putting the onus for getting rid of
corruption on society, not the state, Modi painted corruption as a cultural problem, not one of
policy and the law. Right from the moment demonetization was announced, Modi
acknowledged that peoples' lives would be disrupted.
The Prime Minister responded by invoking civic duty and patriotism: Citizens should accept
the challenges of demonetization as a “sacrifice” and “face difficulties for the benefit of the
nation.” This appeal to the greater common good permeates Modi's speeches on
demonetization, culminating in his New Year address in which he compared the “patience,
discipline, and resolve” that the past seven and a half weeks had required to wars that India
had fought in previous decades (Modi, 2016b).
Demonetization and the relationship between cash and corruption Prime Minister Modi's
announcement of demonetization in early November named three policy goals: reducing
corruption, punishing hoarders of “black money” and undermining counterfeiters. Initial
communications by the RBI and the MoF echoed these goals but did not elaborate on the
rationale behind them. The RBI's first press release on demonetization, for example, stated
that the policy was 6 “necessitated to tackle counterfeiting Indian banknotes, to effectively
nullify black money hoarded in cash and curb funding of terrorism with fake notes” (RBI
2016). Notably absent is any discussion of the relationship between cash and corruption and,
consequently, the anti-corruption credentials of demonetization.
Once again, Prime Minister Modi's speeches provide most of the insight into this issue: “The
magnitude of cash in circulation is directly linked to the level of corruption,” Modi postulated

20
in his 8 November speech that announced demonetization (Modi 2016). The Prime Minister
did not, however, elaborate further on this crucial assumption that underlies demonetization;
we have to turn to December 2016, when Modi gave his first media interview since the policy
had been announced, for some more – albeit limited – clarity on this crucial issue.
The Prime Minister cited the European Central Bank’s decision, in 2016, to phase out 500
Euro notes (following concerns that they were primarily facilitating illegal activities) and an
Indian government report from 1971, by the so-called Wanchoo Committee, as evidence that
that “experts across the world have advocated demonetization over the years”. Modi chose to
implement the policy now, he said in the December 2016 interview, because the Indian
economy was in “good shape” and could shoulder the unavoidable “disruption” the policy
was causing. The only other document that provides insights into the Indian government's
perception of the relationship between cash and corruption is the Economic Survey, an annual
document issued by the MoF that provides an overview of the state of the Indian economy
and discusses relevant government programmes.
Kohli and Ramakumar (2016), citing former RBI governor Patel, argue succinctly that “The
idea that black money or wealth is held in the form of notes tucked away in suitcases or
pillow cases is naïve.” Rather, they estimate, that the majority of unaccounted income in
India is held – and transferred – using real estate, stocks, opaque investments (called
“benami” or “without a name” in Hindi), precious metals and undeclared foreign assets. The
lack of references to any of these alternative modes of corruption within government
communications on demonetization illustrates that the Modi administration presents
corruption primarily as a cash-based issue. By creating a narrative that emphasizes the role of
cash, demonetization may divert attention from future ABC strategies that take a more
holistic approach, such as strengthening legislation and building the capacities of regulators
and anti-corruption watchdogs.
Policy challenges and response rural banking and distress The RBI decision, on 14
November, to disallow DCCBs (DISTRICT CENTRAL COOPERATIVE BANKS) and
PACS (PRIMARY AGRICULTURAL SOCIETY) from accepting or exchanging old
currency was perhaps the most controversial one. A key reason for this controversy was the
fact that these institutions provide the only access to banking for an overwhelming majority
of India’s rural population, which includes small-scale farmers and lower income groups
(Asian Development Bank, 2013). Farmers in particular depend on DCCBs and PACS
heavily, including when it comes to purchasing seeds and fertilizers. Suddenly, a large part of
India’s rural population was forced to commute to larger villages or cities to exchange or

21
deposit old notes. Although the RBI did not present any official reasons for putting these
restrictions in place, it was speculated that the government was concerned with what was
perceived to be unusually large cash deposits at DCCBs and PACS immediately after the
demonetization announcement. Between 8 and 14 November, DCCBs in 17 Indian states
received deposits of approximately 90 billion rupees (Fernandes and Sukhi, 2016).
The RBI implicitly questioned the source of wealth of depositors belonging primarily to the
marginal agriculture sector, reportedly raising concerns that DCCBs were used to park
unaccounted funds and launder unaccounted income (Economic Times, 2016). Following the
RBI circular, operations at 372 DCCBs and over 93,000 PACS were reported to have come to
a virtual standstill. Many of these institutions temporarily suspended operations as they were
unable to undertake banking activities crucial to the rural sector, including loan payment
collections, 8 dispensing cash, paying dividends and interests, distributing fertilizers and
running public distribution shops for the poor (Matthew, 2016).
The timing of this decision coincided with the peak agricultural season of harvesting summer
crops and sowing winter crops. This disrupted cultivation and adversely affected the
marketing and sale of agricultural produce as traders were unable to pay in cash. The
difficulties of the producers of perishables were particularly acute. Further, many farmers
were unable to buy seeds and other inputs or to pay agricultural workers for farm operations
(Alliance for Sustainable and Holistic Agriculture 2017). The decision triggered intense
agitation by employees of rural banks and prominent farmer groups (representing over 20
million farmers in the country) in states like Maharashtra, Kerala, Uttar Pradesh, Gujarat,
Tamil Nadu and Karnataka. Protests and demonstrations lasted from mid-November to
January and were particularly well-supported in the southern states of Kerala and Tamil
Nadu, which have the largest cooperative banking systems in the country (National
Federation of State Cooperative Banks, 2016). While cooperative banks moved regional high
courts and the Supreme Court of India challenging the government order, protesting farmer
groups wrote to the Prime Minister demanding immediate exemption of farming transactions
– especially sale of harvested crops and purchase of inputs – from demonetization rules
(National Seed Association of India, 2016).. Disruption in small businesses In addition to its
impact on the agrarian sector, demonetization also had a significant impact on the informal
sector, which currently employs more than 80% of India’s workforce, including through
micro, small and medium enterprises (MSME).MSMEs are heavily cash dependent, often
managed by individual proprietors with small turnovers, limited reserves and access to
finance.

22
Demonetization caused serious disruptions to such businesses, many of which were already
struggling due to the steady decline in credit flows and a surge in non-performing assets in
rural banks. This reportedly led to a substantial drop in production capacity and significant
loss of earnings, wages and employment (India Today, 2017). The long terms effects of
demonization on the MSME sector are yet to be studied in detail, however the immediate
economic challenges faced by the sector were captured by a number of independent studies
and industry surveys. A perception survey by the India Development Foundation, a private,
non-profit research entity, estimated over 74% of temporary jobs in urban, small-scale
industries across nine northern states were lost and observed reverse migration to villages
(India Today, 2017).
A study by the All India Manufacturers’ Organisation estimated a loss of 35% of temporary
jobs in MSMEs across the country sector and a 50% drop in revenue during the first 34 days
of demonetization (Business Standard, 2017).Edelweiss, a diversified financial services firm
made similar observations, estimating a more than 70% decline in MSME business activity
during the first few weeks of the policy (Edelweiss, 2016). The report further estimated a
permanent negative impact on 20% to 30% of MSME businesses and a significant reduction
in job growth for non-skilled workers in the near term.
Finally, the Associated Chambers of Commerce and Industry of India, one of India’s primary
trade organizations, in a national survey on the impact of demonetization on small enterprises
in January 2016 stated that the policy had a negative impact on rural consumption and job
creation in the MSMEs in the immediate run (Mint, 2017). According to the latest
government data on MSMEs, from 2006-07, there are 20 million unregistered rural sector
units in India, making up over 55% of such micro enterprises. Urban MSMEs stood at 16
million. Approximately 2.2 million urban units were added between 2007 and 2015.
Recognizing the need to relieve some of the pressure on MSMEs brought on by
demonetization, the Modi administration appeared to make MSMEs a priority in the
budgetary allocations for 2017-18. To that effect, it introduced a number of tax breaks,
including the reduction of corporate tax and presumptive tax for companies with an annual
turnover less than half a billion rupees and entities with a turnover of less than 20 million
rupees, respectively (MOF, 2017b). It also increased credit guarantees to MSMEs from 10
million to 20 million rupees and significantly augmented investment support to boost digital
infrastructure in the sector. These budgetary announcements were generally well-received by
MSMEs, reflecting hopes that they would lead to better infrastructure and a formalization of
financial services.In the long run, however, it appears that the government announcing an
electoral funding reforms including a reduction in the permissible amounts of anonymous

23
political donations by a factor of ten, from 20,000 rupees to 2,000. (MoF, 2017) Such
measures to institutionalize political funding have been longstanding recommendations of the
Indian Election Commission (EC) to address corruption in the electoral process (Election
Law Journal, 2012). Although the government did not accept all recommendations of the EC,
the announcement sent a positive message vis-a-vis the integrity of the demonetization
exercise and the government’s commitment to address the primary roots of corruption more
broadly. While received mostly positively, it is yet to be seen how this proposed reform will
impact the nexus between elections and corruption in the long run. Approximately a month
into demonetization, public opinion on the policy became increasingly polarized. While a
large part of the population continued to show support for the initiative, hoping it would
penalize “rich criminals” and “hoarders of illegitimate cash”, public intellectuals, academics,
industrialists and political groups called the policy “ill-timed”, “ill-conceived” and “badly
implemented” and alleged it unleashed “economic anarchy” and tremendous hardships on
rural India (Iyengar, 2016). One stream of critics claimed the Prime Minister had acted on his
own, without sufficient consultation with stakeholders and not taking into account the gap
between urban financial systems and agrarian economies, reflecting a lack of knowledge
about life in rural India. Civil society groups also contended that the “war on black money”
narrative was being used to forcibly and prematurely integrate rural India into techno-
financial systems, not to fight corruption (Pandit, 2016). Others raised doubts on the efficacy
of the policy, noting that demonetization would not affect the holdings of those whose assets
resided in tax havens, gold or real estate (Iyengar, 2016). The RBI, the custodian of India’s
monetary policy, received particular attention within these allegations. Government
statements indicate that a very small group of people had been involved in planning
demonetization; procedural clearances from the law ministry were obtained the night before
its announcement and formal permission of the RBI’s board of governors was reportedly
obtained in a “coffee session” on the day of the announcement itself. The President and
Cabinet ministers were also kept uninformed until shortly before the Prime Minister’s speech
(Kapoor, 2016). In its defense, government representatives emphasized that demonetization
had to be planned on a need-to-know basis to avoid leaks. Secrecy and decisiveness were key
to the success of demonetization, Modi argued, positioning himself as a strong leader willing
to take lone decisions and committed to societal change. An even more powerful argument
that the Prime Minister employed, however, was appealing to patriotic sentiment,
highlighting that the people of India had “made the world stand up and notice [their]
historically inherent qualities of sacrifice, discipline, understanding and commitment to the
nation” (Chengappa, 2016).

24
Figure 2.1 (Source: The Indian Express 9th November 2016)
Figure 2.2 (Source: The Telegraph date 14th November 2016)
*****

25
CHAPTER 3
PROS AND CONS OFDEMONITISATION

26
CHAPTER 3
PROS AND CONS OF DEMONITISATION
It has been almost three years and a half since government demonetized 500 and 1,000 rupees
notes. It was a major decision which had its impact on all sections of the society. Now,
everyone wants to know if it was a masterstroke by the government or a setback to the nation.
Demonetization gave a new direction to the way people do monetary transactions in India and
attempted to destroy parallel economy. Just like a coin has a flip side, demonetization too has
its advantages and disadvantages.
3.1 ADVANTAGES OF DEMONETISATION:
If we are to believe the supporters of demonetization, the government has successfully
completed its demonetization drive and the Indian economy has made some major gains.
Here is what the supporters of demonetization have to say about the benefits of
demonetization:
1. A major achievement of demonetization has been that it has helped the government in
tracking black money. The government claimed that large sums of black money were
kept hidden by tax evaders and demonetization has helped it uncover the huge amount
of unaccounted cash. According to estimates made by RBI during the demonetization
drive, people had deposited more than rupees 3 lakh crores worth of black money in
the bank accounts.
2. A major reason behind demonetization was that a big part of black money was being
used for funding terrorism, gambling, in inflating the price of major assets classes like
real estate, gold and other social evils. Demonetization is acting as an effective
countermeasure against such activities. Now all such activities are expected to get
reduced for some time. If the claims are correct then it should take years for people to
generate that amount of black money again and hence in a way it helps in putting an
end this circle of people doing illegal activities to earn black money and using that
black money to do more illegal activities.
3. Another expected benefit was that due to people disclosing their income by depositing
money in their bank accounts, the government will get a good amount of tax revenue
which can be used by it towards the betterment of society by providing good
infrastructure, hospitals, educational institutions, roads and many facilities for poor
and needy sections of society.

27
4. Another major objective of the government achieved through demonetization was to
push the Indian economy towards becoming cashless. The government succeeded in
encouraging people to use digital means for making transactions.
5. Economy has witnessed close to 20% decline in currency in circulation, number of
taxpayers has considerably increased and a large number of shell companies have
been identified.
3.2 DISADVANTAGES OF DEMONETISATION:
On the other hand, the critics of demonetization have a completely different opinion about
the effects of demonetization on the Indian economy. Here is what they have to say about
the drawbacks of demonetization:
1. The biggest disadvantage of demonetization has been the chaos and frenzy it created
among common people initially. Everyone was rushing to get rid of demonetized
notes while the inadequate supply of new notes affected the day to day budgets of
citizens. Banks and ATMs witnessed long queues while small businesses suffered
temporary financial losses. The situation was even worse in rural India where people
struggled to exchange and withdraw cash due to lack of enough number of banks and
ATMs in their vicinity.
2. Another disadvantage is that destruction of old currency units and printing of new
currency units involve costs which has to be borne by the government and if the costs
are higher than benefits then there is no use of demonetization.
3. Another problem is that this move targeted the black money, but many people who
had not kept cash as their black money and rotated or used that money in other asset
classes like real estate, gold and so on were not affected by demonetization. It turned
out that more than 99% of demonetized currency came back to the RBI and was
accounted for. Therefore, the government’s claim about black money fell on its face.
So, we can conclude that demonetization has both advantages and disadvantages.
Demonetization alone cannot fight parallel economy and eliminate black money. Several
other supportive measures are required by the government to change the economy for good.
Moreover, it is critical to emphasize that demonetization was a unique event, and hence,
drawing inferences based on theory, armchair analysis or even short-term data, could lead to
misleading conclusions. Serious research needs to be done extremely carefully and
reasonably long-term data must be considered before reaching any conclusion about
unprecedented policy events such as demonetization. This becomes even more important
when there are other related moving parts such as goods and services tax (GST), clean-up of

28
the banking system, real estate sector reform and others going on at the same time. So, at the
moment, it is better to wait a bit longer until complete analysis of demonetization’s effects is
done to reach the correct conclusion.
3.3 PRE AND POST EFFECTS OF DEMONITISATION:
In order to understand demonetization better the proper analysis of pre and post effects of
demonetization is required. The impact of demonetization on Indian economy is broadly
described under three headings:
 DIRECT TAX COLLECTION
 DIGITAL PAYMENTS
 INDIA’S QUARTER GDP(GROSS DOMESTIC PRODUCT)
3.3.1 DIRECT TAX COLLECTION
The government has given the tax evaders many opportunities to come clean through the
Income Declaration Scheme and new Taxation Laws (Second amendment bill). The bill
contains some heavy penal provisions for the tax evaders. Persons who declared their income
during the demonetization period without declaring its source were required to pay 50% in
taxes. This included 30% tax on declared income plus 33.33% surcharge on tax i.e., 10% plus
a penalty of 10% of declared income total 50% of the income. Not only this, persons were
also required to deposit an amount equal to 25% of declared income in the
PradhanMantriGareebKalyanYojana (PMGKY), 2016 account on or before 30th April 2017.
These deposits were to be made for a period of 4 years. Hence, those who made these
deposits will get that income back after 4 years but without any interest. The declaration in
Form No. 1 under PMGKY was required to be filed by 10th May 2017.
But if you failed to declare the undisclosed income (cash deposits during the demonetization
period) under PMGKY and are subsequently identified by the tax department, then you will
have to face the following consequences:
1. If you are able to relate your deposits to any specific Financial Year and are able to
show and explain the source of such income, then you can pay taxes as applicable on
such income along with the applicable interest and penalty of 30% of the admitted
income.

29
2. However, if you are either not able to show the year in which the income was earned
or explain how it was earned, then you will have to pay taxes as applicable on such
income along with the applicable interest and penalty of 60% of the admitted income.
Therefore, it is important for you to file the Income Tax Return for AY 2017-18 (FY 2016-
17) very carefully and declare the cash deposited during the demonetization period in an
appropriate manner.
A taxpayer who has not opted for the PMGKY scheme but offers his black money in his
Income Tax Return will have to pay tax and penalty at the rate of 77.25 percent. But those
who do not file the return under the scheme and are caught later with undisclosed income in
any scrutiny assessment will have to pay 83.25 percent of the undisclosed income as tax and
penalty.
The penalty is even more severe if you did not declare your cash deposits during
demonetization either under PMGKY or in your tax return for AY 2017-18. If a raid is
conducted on you in such a case, then you will have to pay 107.25 /137.25 percent tax and
penalty depending on whether you surrender your undisclosed income during the search or
not.
Latest Update: Press Release by CBDT on Impact of Demonetization – Dated 31-8-2017
CBDT disclosed information on how demonetization affected black money and helped in
widening of tax base and direct tax collections.
Increase in Surveys, Searches & Detection of Black Money
Based on demonetization data, the government boosted its enforcement actions which had the
following results:
 There was 158% increase in number of searches (from 447 to 1152 groups)
 The number of seizures increased by 106% (from Rs. 712 crore to Rs.1469 crore)
 There was 38% increase in admission of undisclosed income (from Rs. 11226 crore to
Rs. 15496 crore)
 The government conducted 183% more surveys (from 4422 to 12520)

30
 Increase in the number of survey resulted in 44% increase in the detection of
undisclosed income (from Rs 9654 crore to Rs 13920 crore)
Increase in Return Filing and Tax Collection
 The number of e-returns of Individual taxpayers filed till 5th August, 2017 (due date
of filing) increased to 2.79 crore from 2.22 crore returns filed during the
corresponding period of last year, registering an increase of about 57 lakh returns
(25.3%).
 The total number of all returns (electronic + paper) filed during the entire Financial
Year 2016-17 was 5.43 crore which is 17.3% more than the returns filed during FY
2015-16.
 For FY 2016-17, 1.26 crore new taxpayers (return filers + non-filers making tax
payments) were added to the tax base (till 30.06.2017).
Increase in Direct Tax Collection
 Collection of Advance Tax under Personal Income Tax (i.e. other than Corporate Tax)
as on 05.08.2017 showed a growth of about 41.79% over the corresponding period in
F.Y. 2016-2017.
 Collection of Self-Assessment Tax under Personal Income Tax showed a growth of
34.25% over the corresponding period in F.Y. 2016-2017.

31
The data interpreted below is collected from CBDT from year 2011 to 2017.
Figure 3.1 (Source: Central Board of Direct Tax)
From the above figure 3.1 we interpret that the increase in direct tax collection in the year
2016-17 reflects the impact of demonetization with 14.54% however this so called numerical
figure is also achieved in the year 2013-14 with 14.24%. So increase in direct tax collection
was not due to demonetization.
493987
558989
638596
695792
741945
849818
10.76%
13.16%
14.24%
8.96%
6.63%
14.54%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
0
100000
200000
300000
400000
500000
600000
700000
800000
900000
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
DIRECT TAX COLLECTION IN CRORES
Total Direct Tax Year to Year Growth

32
The data interpreted below is collected from CBDT from year 2011 to 2018.
Figure 3.2 (source: Central Board of Direct Tax)
From the above figure 3.2 we interpret that there is no significant increase in number of
return files due to demonetization. Moreover, the number of return files during pre-
demonetization is more than post demonetization.
0
10
20
30
40
50
60
70
80
90
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
GrowthRate ofNumber of Returns Filed(Y-o-Y)
Data sourse:Income Tax India
Growth Rate

33
Note ban announced
Ban partially lifted
86000
88000
90000
92000
94000
96000
98000
100000
102000
104000
106000
NOV DEC JAN FEB
In
billion
rupees
DIGITAL PAYMENT WANE AS CASH RETURNS
INDIANS PREFER CASH?
Digital Transaction
3.3.2 DIGITAL PAYMENT:
The definition of an electronic payment system is a way of paying for a goods or services
electronically, instead of using cash or a check, in person or by mail. An example of an
electronic payment system is Pay Pal. An example of an electronic payment system is the use
of a credit card. In order to curb black money, money laundering and fake money digital
payment brings revolutionary changed in payment system. The digital payment system will
enable the economy to go cashless further simple, effective and faster mode of transaction.
One of the major reasons of demonetization is cashless economy or to make the economy on
digital transaction. The given figure below depicts a different scenario. In November 2016
when the note ban was announced the digital transaction stand at 94000 billion rupees or
94lakh crores then in December 2016 after demonetization there is 10.63% increase in digital
transaction. After the ban partially lifted the digital transaction reduced to the initial level.
Figure 3.3 (Source:Reserve Bank of India Elctronic Payment Systems)

34
3.3.3 INDIA’S QUATERLY GDP:
Cash is the preferred mode of transaction globally, accounting on average for 85% of them.
In some of the developed countries, transactions carried out through cash are less than 50% of
total transactions. In India, this ratio is at around 95%. Easy accessibility, its certainty of
acceptance and efficiency as the settlement is not dependent on any additional infrastructure,
and no additional charges make it universally the most preferred mode. The only problem of
cash transactions is the anonymity and difficulty of establishing expenditure trail which make
it an ideal mode for unreported transactions as well.
The ratio of currency to GDP (gross domestic product) in India, which averaged 8.4% during
1975-2000, crossed 10% for the first time in 2002-03 and has remained above this level since
then. This ratio has averaged 10.8% in the last decade. There has not only been a relatively
sharp increase in the ratio of currency to GDP during 2015-16 but a reversal of the negative
trend witnessed in the previous three years. The increase in this ratio could have persisted
through the current year as well before the demonetization of higher denomination notes
announced on 8 November. The figure given below represents the above given data.
Figure 3.4 {Source: Tradingeconomics.Com (Ministry of statistics and Programmed
Implementation)}

35
The figure depicts the new rules regarding old notes and new banking regulations.
Figure 3.5 (Source: dtnext.in)

36
The given below figure shows the post demonetization effects on Gross Domestic Product
(GDP)
Figure 3.6 (Source: Ministry of statistics and Programmed Implementation & R.B.I)

37
After demonetization numerous alternatives of modes of exchange of old note representing
the exploitation of various loop holes in the banking system.
Figure 3.7 (Source: economictimes.indiatimes.com)
*****

38
CHAPTER 4
DEMONITISATION: ITS EFFECTS ON
SELECTED SECTORS

39
CHAPTER 4
DEMONETIZATION: ITS EFFECTS ON SELECTED SECTORS
Including the sectors mentioned in the scope other affected sectors are also included in order
to visualize and analyse the impact of demonetisation on the Indian economy.
4.1 ECONOMY:
IMPACT: Demonetization torpedoed India’s economy just when it was getting into a cruise
mode, fired by good monsoon-led rural demand and Seventh Pay Commission-enabled urban
buying. The 8% growth that looked within grasp in FY17 is beyond horizon now. Only about
a quarter of currency cancelled is back in circulation, and that too is being stashed away for
emergency. Lower denomination notes are not available to facilitate transactions. The f all in
demand will further dent already weak investments. The sharpest crash in services PMI since
November 2008 in the aftermath of the global financial crisis underscores the risks. Ambit
sees growth falling to a low of 3.5% in FY17. Others are not so pessimistic, pencilling in
about 7%.
CURRENT VERDICT:Strongly negative
SOLUTION: Boost sentiments big time. Cut corporate tax to 25% to stimulate demand. Raise
income tax slabs to reduce effective tax on income tax payers. Offer low interest rate loans
for housing through interest subvention. Urgently plough back income from demonetization
into public investments. Budget will determine economy’s near future.
4.2 JOBS:
IMPACT: Hiring experts say jobs at senior levels are not and won’t be impacted. But overall
hiring is down right now, as managers seek to protect revenue/profit targets. No job cut plans
as of now. Variable pay/increment amounts may be impacted. Job numbers are difficult to
estimate, experts say, but sectors where hiring is most hit are retail, consumer goods, real
estate, infrastructure, logistics (for ecommerce especially), auto consumables, and building
products. Hiring by mobile wallet and fintech companies are up, though.
CURRENT VERDICT:Mildly negative, and may improve in future.
SOLUTION: Depends on how many consumers can shift to cashless transactions, which partly
depends on how many retailers do – an uncertain process at best. Some consumer sector
experts say Government of India should consider giving a boost to shopping, like Western
governments do in tough times. Shopping vouchers to Jan Dhan account holders is one idea.
Consumers need to feel good again, tax cuts would be a huge help.
4.3 REAL ESTATE:
IMPACT: Insiders say there’s a 40%-plus drop in enquiries and sales across key markets of
Mumbai, Delhi, Bengaluru and Pune. Deals in secondary market have come to a standstill. In
Bengaluru, drop in deal closings is as much as 60%. Most homebuyers are waiting for big
price reductions. With fear of black money transactions and cash crunch added to an already
slumping real estate sector, near future is bleak.

40
CURRENT VERDICT:Strongly negative, can get worse
SOLUTION: Big rate cut will help, as will tax concessions on home purchases. RBI policy
and budget are keys. But sentiment improvement will be a very long process.
4.4 E-COMMERCE:
IMPACT: Mostly bad, some good. For the online retail market, gross merchandise value
(GMV) of players fell by 40-50% in first few weeks after demonetization, in the middle of
their biggest quarter for sales. Things may remain bleak till March. Even high-value items
like expensive smartphones are selling less. Products returned are up by 50%. And experts
feel consumer sentiment won’t improve quickly. But the boost to digital payments (100%
jump in transactions) has led industry to hope for a bright medium term. Also, grocery and
food delivery set-ups are doing better since they sell essential items. Some saw new customer
orders jump to 25%, from the usual 15-16%.
CURRENT VERDICT:Negative, can get worse in short term
SOLUTION: Measures like tax cuts will improve sentiment. Sector specific innovations like
card or mobile wallet payment on delivery will help.
4.5 TOURISM:
IMPACT: Peak tourism period of November-December badly hit. For tourist destinations
beyond metros, business may be down by as much as 40%. Tourism business in metros may
go down by 10%. Cash shortage at airports and hotels are a big problem. And many national
monuments entry points don’t have card payments facilities. Western countries have issued
advisories on cash crunch in India.
CURRENT VERDICT:Strong negative, peak season may be badly hit
SOLUTION: Provide more cash at various critical points in tourist destinations as most
vendors don’t have cashless payment systems at tourist spots, or have a massive drive to
spread cashless transactions.
4.6 AUTOS:
IMPACT: Post-demonetisation, there was some cushion at wholesale level for Maruti Suzuki,
Toyota Kirloskar Motor and Tata Motors from dealer demand for new models or new
variants like Baleno, Brezza, Fortuner, Innova and Tiago. Hyundai India, Honda Cars India
and Mahindra & Mahindra have seen some short-term impact on sales. At the retail level,
sales for cars without waiting period is down 30-50%. Two-wheeler and commercial vehicles
have been hit harder. Sixty to 65% of entry level motorcycle sales happen in rural markets
where cash is king. Two-wheeler sales may have gone down by 5% last month. Tata Motors
posted a 17% decline in commercial vehicle sales in November.
CURRENT VERDICT:Negative, but not yet bleak
SOLUTION: Car-makers are promoting use of cashless transactions. But upgrade in consumer
sentiment is the key to avoiding deep negative impact.

41
4.7 AVIATION:
IMPACT: In world’s fastest growing aviation market, passenger traffic growth will fall below
20% from an average 23-24% growth recorded in previous years. Flight bookings dropped
drastically in days after demonetization. Offline travel agents, who took cash, badly hit.
Flights to small towns, where cash payments are the norm, are also badly hit, may post
negative growth.
CURRENT VERDICT:Somewhat negative, not alarming yet
SOLUTION: Discount offers from airlines. Making sure small operators take online payments.
4.8 TELECOM:
IMPACT: Mobile phone shipments fell by 26% in November, compared to the previous
month. Smartphone shipments are down by 23%. Inventory pile up with retailers. Big sellers
who do card and online transactions less badly hit. IDC analysts expect sales for feature
phones to drop by 25% in the quarter, and smartphones to fall by 17.5%.
SOLUTION: Zero cost EMI offers from brands, retailers, buy now pay later plans, among
other offers can boost demand. But future of cash purchase by low-end consumers still dim.
4.9 GOLD:
IMPACT: Scared by government warnings, sale of gold against old currency notes fell
drastically. NRI customers have fled. Sales are down sharply, and it was already a bad year
for gold.
SOLUTION: No immediate solution, a long wait for sentiments to turn around, and
fundamental change in terms of fewer cash transactions can have big impact.
4.10 AGRICULTURE:
IMPACT: Interestingly, villages have adapted in some ways better than cities. Government of
India allowing tax free deposits of any amounts for farmers have led to many of them getting
20% premium from traders when transacting. Informal credit for daily purchases and use of
old notes for key inputs and selling produce have kept rural economy going. Crop planting
increased 20-35% every week after demonetization and remained higher than last year in all
weeks after November 8. But a lot depends on cash supply improving quickly in the new-
year.
CURRENT VERDICT:Neutral to positive
SOLUTION: Rural India is hoping the new-year will mean back to normality on cash supply,
if not, major disruption possible.
*****

42
CHAPTER 5
DATA ANALYSIS AND INTERPRETATION

43
CHAPTER 5
DATA ANALYSIS AND INETERPRETATION
A random sample of 50 responses was taken for the present study. In the responses there are
38 males and 12 females. All the subject in the present study comes under the age group of
18-40 year with minimum educational qualification is graduation. The sample is taken from
various sectors of people like student, employed, unemployed and people from business.
Table-5.1: Analysis of effectiveness of Government’s move of demonetisation.
What do you think of
Government’s move of banning
old Rs500 and Rs1000 notes?
Excellent Good Bad Very bad
Responses 15% 63% 18% 4%
From the above table 5.1 we interpret that the government’s move was welcomed by 78%
(15+ 63%) of the people. However the remaining 22% were against the move. Being the
majority supporting the move but it failed to satisfy everyone. The possible reasons are
timing of announcement of demonetization, deficit of new notes and unpreparedness of
banking system.
Table-5.2: Analysis of impact of demonetisation.
Do you think that
demonetisation will help in
curbing black money,
corruption and terrorism?
Immediate
impact
Impact in
long-term
Minimal
impact
Don’t
know
Responses 22% 27% 45% 6%
From the above table5.2 the impact of demonetization on black money, corruption and
terrorism where 45% responses thought that demonetization had minimal impact. The
possible reasons are the black money is 30% in cash and other 70% is in the form of gold
(majority), bonds, land and other property. Moreover, the terrorism activities were seen in the
same month of demonetization, in Assam, J&K, and Nagrota (source: Times of India).
Table-5.3: Analysis of awareness about black money.
Do you think that black money exists? Yes No
Responses 94% 6%
From the above table 5.3 we interpret that there is awareness among people about black
money.

44
Table-5.4: Analysis of favourability of curbing black money through demonetisation.
Are you in favour of curbing black money through
demonetisation?
Yes No Can’t say
Responses 50% 35% 15%
From the above table 5.4 we interpret that there is mixed responses about the black money
eradication through demonetization. Only half of the responses are in the favour. The
possible reasons are the black money is 30% in cash and other 70% is in the form of gold
(majority), bonds, land and other property. Moreover, the value of demonetized currency is
15.44lakh crore out of which15.28lakh crore returned in banking system in 2018. The
remaining 16,000 crore is the estimated black money again out of which 3,300 crore (old
notes) stuck in Nepal and Bhutan and other unaccounted amount are with NRIs, poor people
and temple donations. (Source: Reserve Bank of India)
Table-5.5: Analysis of feasibility of cashless economy.
Is it a good idea to go cashless? Yes No Can’t say
From the above table 5.5 we interpret that the majority of responses are in favour of
digitisation of economy or cashless economy in which corruption can be reduced.
Table-5.6: Analysis of inconvenience faced.
Do you think it was practical to stand in ATM queues
for exchange of old notes?
Yes No Can’t say
From the above table 5.6 we interpret that the half of the responses thought that it was
impractical to stand in long and tiring queues. The possible reasons are the rush to the bank
claimed 105 deaths as reported by Indian Express and the banks were not prepared to handle
the large number of customers desperate to exchange their old notes as well as the
irregularities and unpreparedness of RBI. The 36% of the responses thought it was practical
only because they thought that the difficulty of standing in queues was only temporary and
they were doing their duty towards nation.

45
Table-5.7: Analysis of Government’s role against corruption.
What do you think of Government’s
role against corruption?
Very good Good Ok Not effective
Responses 12% 38% 30% 20%
From the above table 5.7 we interpret that there is mixed responses about the role of the
government against corruption. The government is needed to take more effective steps in
order to curb corruption. There was report of fake currencies amounting 11.23 crores face
value detected after demonetization (source: Press Trust of India, New Delhi) were untreated.
Table-5.8: Analysis of affected sections of society.
Among which of these
was most affected by
demonetisation?
Common man Politicians Educational
institution
Banking
institution
Responses 72% 20% 2% 6%
From the above table 5.8 we interpret that common man was the worst affected by
demonetization. In support of this analysis the reports of the Indian express portray the
significant impact on consumer durables. Thus, common man faced gruesome difficulties for
daily basic needs. Moreover, the worst affected were the daily wage labourers and employees
of MSME sectors as 15 lakh jobs were lost in Jan-April2017 (source: The Indian express).
Table-5.9: Analysis of success of demonetisation.
Is demonetisation successful till now? Yes No Can’t say
From the above table 5.9 we interpret that even after Three years of demonetization it is still
not as effective as it was expected. Thus, the counters against demonetization made above are
reasonable.
Table-5.10: Analysis of effectiveness of demonetisation.
Do you think that demonetisation helped
India’s economy?
Yes No Can’t say
From the above table 5.10 we interpret that the majority signals toward negative impact on
economy. The possible reasons could be the 2.5% decrease in GDP due to devastating impact
on agriculture sector and MSME sectors.
*****

46
CHAPTER 6
FINDINGS, SUGGESTIONS AND
CONCLUSION

47
6.1 FINDINGS:
The major findings of the present study are summarized and follow:
 The demonetization was welcomed by majority of people but the sole reason for
which the process of demonetization enacted that is to curb black money was seen
minimal impact. According to RBI 99.4 % of the old currencies have returned in
2018 however it was estimated by SBI that 17% of the old currencies won’t come to
the banking system(source: NDTV). The data of the RBI suggest that majority of the
black money has been turned to white and the issue of black money is resolved. The
contrast in the above analysis suggest that either there was no black money or people
found out loop holes and exploited it.
 The impact on terrorism was expected to a greater extent however the terrorist attack
on the same month of demonetization in Assam’s Tinsukia then followed by Jammu
& Kashmir , Nagrota and recently Balakot where 47 of our army soldiers martyred.
This support my analysis of the responses of demonetization has minimal impact on
terrorism.
 The idea of cashless economy was also a prominent reason for demonetization. The
idea of going cashless was a hit and was seen after demonetization. However, there
was sudden fall in digital payment in the beginning of 2018. On investigation by
news agencies it was revealed that the fear of cheat through online transaction,
unawareness about online banking system are the major reasons. So, even though the
cashless economy is effective against corruption, it was not widely accepted by
majority of the population.
 The common man was the worst affected sector of the society followed by the
banking institutions. The analysis is supported by reports of news agencies
highlighting the loss of 15lahk jobs in 2018 and deaths in hundreds while standing in
queue and in hospitals as they didn’t accept the old notes.
6.2 SUGGESTIONS:
 The reasons of black money is only 1-2% pay tax and other 99% do not pay tax as
they do not have trust on government. To curb black money the government should
put online tax payment and also online donation platform for national and state parties
funding and the same should come under RTI (Right to Information)act.
 Lokpal bill should be enacted as it will give power to the people to disclose the
unaccounted sources of party funding.
 The government lacks seriousness to the whistle blowers like recently HSBC offers to
cooperate with India in the matter of black money(Source: Hindustan Tines). So the
government should take whistle blowers seriously and adequate protection should be
given to the same.
 The CBI (Central Bureau of Investigation) should be independent.
 The government should close bureaucratic loop holes and simplify the lengthy
process of digitisation.
 The banking system should be more effective and improved regulations should be
implemented.

48
6.3 CONCLUSION:
Through demonetization, Prime Minister Modi successfully portrayed himself as a leader
willing to take decisive and, if necessary, drastic steps to tackle bribery, money-laundering
and channels of income-generation, by-passing the formal mechanisms of the Indian state.
While the long-term impact of demonetization is yet to be seen, the policy illustrates the
priorities of the Modi government: Corruption is primarily presented as a cash-based issue;
demonetization did not explicitly target noncash-based corrupt activities such as property
transfers, gold or the use of tax havens. By creating and cementing a narrative on corruption
that emphasizes the role of cash, demonetization may therefore divert attention from future
attempts at shaping anti-bribery and corruption policies taking a more holistic approach.
Returning “black money” from foreign tax havens and distributing it to the poor was one the
key promises made in Modi's successful 2014 election campaign; demonetization, thus, can
be seen as more than economic policy but rather as a political tool. With previous schemes,
such as a 2016 amnesty offer for tax evaders, being less successful than anticipated, Modi
and his party have a strong impetus to portray demonetization as a show of their commitment
to anti-corruption. In order to do so, the government had to establish in the public mind a
strong relationship between cash and corruption. This, however, may have skewed the public
understanding of anti-bribery and corruption frameworks, downplaying not only other means
of acquiring and storing income generated from corrupt activities but also presenting
corruption as a conflict between rich hoarders of cash and the marginalized poor.
Internationally-recognized objectives such as strengthening checks and balances, building
capacity of public institutions and incentivizing integrity and transparency measures within
the private sector may have a harder time gaining recognition in India after the top-down and
somewhat simplistic policy of demonetization captured the public imagination on what the
fight against corruption should look like. The outlook is not all gloomy, however.
Demonetization is a continuation of a larger trend that demonstrates the increasing role of
anti-corruption policies in the Indian public discourse. Demonetization may be an important
step in that direction, having garnered significant public support for policy-making and
further strengthening the relevance of integrity within the political discourse. Demonetization
has changed the tone and pace at which corruption is spoken about in India. Crucial for the
long-term success of policy-making, however, will be in how far the policy has set the
agenda on the relationship between cash and corruption and the role of institutions and the
private sector.
*****

50
BIBLIOGRAPHY:
BOOKS:
 Research methodology 2017 Authors Dr Vasanta R Patri,J S Chandan, Dr Harish
Kumar
 I DO WHAT I DO 2017 Author Raghuram Rajan (Ex-RBI Governor)
JOURNALS:
 Mankiw, 2016
 Disowned Currency: The odd case of Iraqi Swiss Dinar. The blog of J P Koning,
Moneyness, May 27, 2013
PERIODICALS:
 Economic Times of India
 RBI and Ministry of Statistics & Programme
 The Telegraph
 Indian express
WEBREFERENCES:
1. https://www.researchgate.net/publication/324952991_Impact_of_Demonetisation_on
_Indian_Economy_A_Critical_Study
2. https://www.researchgate.net/publication/328028398_Demonetisation_and_its_Effect
s
3. https://www.iimb.ac.in/sites/default/files/2018-06/Demonetisation.pdf
4. https://economictimes.indiatimes.com/news/economy/policy/demonetisation-hit-
growth-by-2-percentage-points-us-study/articleshow/67154320.cms?from=mdr
5. https://www.academia.edu/Documents/in/Demonetisation
6. https://www.academia.edu/32856011/Implementing_the_Aspects_of_Financial_Inclu
sion_in_the_Phase_of_Demonetisation_The_Probable_Pros_and_Cons_in_Indian_Co
ntext
7. https://www.academia.edu/32025737/PRM
8. https://www.academia.edu/30783647/Propaganda_Vs_People_Note_Ban_Disaster
9. https://www.academia.edu/30641117/Demonetisation_Maturing_Capitalism
10. https://www.academia.edu/37529679/Black_Money_and_its_Impact_on_Indian_Eco
nomy
11. https://www.academia.edu/37528032/Demonetisation-
Challenges_in_Cashless_Economy
12. https://www.academia.edu/37104347/DEMONETISATION_AND_ITs_EFFECT_O
N_CONSUMERS
13. https://www.mbauniverse.com/group-discussion/topic/business-
economy/demonetisation
14. https://www.investopedia.com/terms/d/demonetization.asp
15. https://www.indianeconomy.net/splclassroom/what-are-the-impacts-of-
demonetisation-on-indian-economy
*****

51
ANNEXURE
(A BLANK COPY OF QUESTIONNAIRE)

52
QUESTIONNAIRE ON DEMONETISATION AND ITS IMPACT
NAME: GENDER:
AGE: PROFESSION:
Q1. What do you think of Government’s move of banning old Rs500 and Rs1000 notes?
a) Excellent
b) Good
c) Bad
d) Very bad
Q2. Do you think that demonetisation will help in curbing black money, corruption and
terrorism?
a) Immediate impact
b) Impact in long-term
c) Minimal impact
d) Don’t know
Q3. Do you think that black money exists?
a) Yes
b) No
Q4. Are you in favour of curbing black money through demonetisation?
a) Yes
b) No
c) Can’t say
Q5. Is it a good idea to go cashless?
a) Yes
b) No
c) Can’t say

53
Q6. Do you think it was practical to stand in ATM queues for exchange of old notes?
a) Yes
b) No
c) Can’t say
Q7. What do you think of Government’s role against corruption?
a) Very good
b) Good
c) Ok
d) Not effective
Q8.Which of these was most affected by demonetisation?
a) Common man
b) Politicians
c) Educational institution
d) Banking institution
Q9. Is demonetisation successful till now?
a) Yes
b) No
c) Can’t say
Q10. Do you think that demonetisation helped India’s economy?
a) Yes
b) No
c) Can’t say
*****

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