The document discusses India's demonetization of 2016. It provides background on demonetization, noting that India previously demonetized currency in 1946 and 1978. It summarizes the key events of November 2016, when ₹500 and ₹1000 notes were withdrawn from circulation. The major aim of demonetization was to make India a cashless society. The document outlines the percentage share of currency denominations before demonetization and discusses the causes, pros, and cons of the policy change. It analyzes the impact on money supply, demand, prices, GDP, and the growth of digital transactions. While demonetization may slow growth initially, the long-term benefits of increased transparency and tax revenues are presented

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2. CONTENTS
1. What is Demonetization?
2. Demonetization history in India.
3. What happened on demonetization?
4. Major Aim of Demonetization.
5. Share of cash in volume of consumer transactions.
6. Percentage share of denominations before Demonetization.
7. Causes of Demonetization
8. Pros of Demonetization
9. Cons of Demonetization
10. Impact of Demonetization in Indian economy
11. Will Demonetization slow down India’s growth ?
12. Conclusion
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3. WHAT IS DEMONETIZATION ?
 “Demonetization is the withdrawal of a particular form
of currency from circulation.”
 It is a process by which a series of currency will not be
legal tender .
 The series of currency will not acceptable as valid
currency.
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4. DEMONETIZATION HISTORY IN INDIA
 This is not the First time, When Indian Currency is Demonetized in
India.
 Earlier it was done in 1946 with the complete ban of ₹1000 and
₹10000 Notes to deal with the unaccounted money i.e. Black
Money.
 Second time, it was done in 1978 by Govt headed by Morarji
Desai when ₹1000, ₹10000 and ₹5000 Notes were demonetized.
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5. WHAT HAPPENED ON DEMONETIZATION?
 On 8th November 2016, Government of India had Announced that
from today onwards ₹ 500 and 1000 rupees note will not be a legal
tender.
 Means that ₹500 and ₹1000 notes will not be accepted by anyone
except the organization declared by the government.
 Public can deposit and change the currency from the banks till 30th
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6. MAJOR AIM OF DEMONETIZATION
Making India A Cashless Society
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8. PERCENTAGE SHARE OF DENOMINATIONS BEFORE
DEMONETIZATION
INR 2&5
0%
INR 10…
INR 20
1%
INR 50
1%
INR 100
9%
INR 500
48%
INR 1000
39%
INR 2&5
INR 10
INR 20
INR 50
INR 100
INR 500
INR 1000
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9. WHAT ARE CAUSES OF DEMONETIZATION
 Black Marketing
 Currency Storage
 Corruption
 Fake currency in the economy etc.
• There can be many causes of Demonetization in any
economy such as:
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10. PROS OF DEMONETIZATION IN INDIA
 People who possesses huge
amounts of black money in hard
cash are at a complete loss now.
 Their black money in hard cash is
now a pile of trash.
 Now, if a Black Money holder
want to deposit money in Bank
Account, Then he/she has to Show
ID.
 There Will Be 200% Penalty On
Income tax Amount
Attack On
Black
Money
Holders
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11. PROS OF DEMONETIZATION IN INDIA
 Most of the fake currencies used to
be in the denominations of ₹500
and ₹1000.
 By banning ₹500 and ₹1000 notes,
Modiji has busted all these
unethical rackets completely.
 Now There Will be no use of these
Money.
Death Knell
To Fake
Currency
Rackets
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12. PROS OF DEMONETIZATION IN INDIA
• Huge sums of money especially in
hard cash in the denominations of
₹500 and ₹1000 was used to fund
Islamic terrorists, Naxalites.
• Now, these Organizations will
suffer from shortage of funds.
• Most of These terrorist, maoist
Organizations used these funds for
buying Arms and Weapons.
• Buying arms is an extremely
difficult task after this ban.
End of
Terrorist
Funding
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13. PROS OF DEMONETIZATION IN INDIA
o Online transaction =
More transparency
= Financial
Intelligence Unit
Will track All online
transactions.
o Now there Will be
More Transparency
In Real Estate
Sector.
Transparency
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14. PROS OF DEMONETIZATION IN INDIA
 While it is practically impossible to have a
100% cashless economy , the proportion
of hard cash in the economy will
decrease and our economy will get more
digitized.
 This will result in greater transparency.
 Now government has put some limitation
for Cash Withdraw from bank Accounts.
People Will go for online payments.
 They Will use PayTM Or other online
payment to companies for Buying goods
or making payments.
 More Use of Debit and Credit card.
Towards A
Cashless
Economy
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15. CONS OF DEMONETIZATION IN INDIA
 Banks will be extremely
over-crowded by people.
 People will forget
everything else and throng
to the places where the
banned notes are being
officially exchanged
leading to a tremendous
chaos.
Rush at Banks
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16. CONS OF DEMONETIZATION IN INDIA
• Due to currency being
sucked out of the market
coupled with Trump’s
victory, the mood at the
stock market was
completely bearish.
• Sensex lost 1600 points at
open. This can adversely
have a negative effect on
trade in general.
Stock Market
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17. CONS OF DEMONETIZATION IN INDIA
 Many Indian housewives
store money secretly so that
they could be of help during
times of financial crisis in their
households.
 The accumulated money of
our respected Indian
housewives is of no use now
until they exchange in the
banks and post offices.
Problem For
House Wives
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18. CONS OF DEMONETIZATION IN INDIA
• Due to shortage of money
in the market, a short-
term cost push inflation
will occur.
• The price of gold has
already become sky
high.
• Prices of vegetables and
fruits have also soared
burdening the common
man.
Short Term
Inflation
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19. CONS OF DEMONETIZATION IN INDIA
 Difficult For Those
Families those
have Weddings.
Marriage
season
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20. IMPACT OF DEMONETIZATION ON INDIAN ECONOMY
 With the older 500 & 1000 ₹ notes being
scrapped, until the new ₹500 & ₹2000
notes get widely circulated in market,
money supply is expected to reduce in
short run.
 To the extent that black money (which
is not counterfeit) does not re-enter the
system, reserve money and hence
money supply will decrease
permanently.
 However gradually as the new notes
get circulated in the market and the
mismatch gets corrected, money
supply will pick up.
Effects On
Money Supply
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21. IMPACT OF DEMONETIZATION ON INDIAN ECONOMY
 The overall demand is expected to
be affected to an extent. The
demand in following areas is to be
impacted particularly:
 Consumer Goods
 Real Estate and Property
 Gold and luxury goods
 Automobiles (only to a certain limit)
 All these mentioned sectors are
expected to face certain moderation
in demand from the consumer side,
owing to the significant amount of
cash transactions involved in this
sectors.
Effects On
Demand
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22. IMPACT OF DEMONETIZATION ON INDIAN ECONOMY
 Price level is expected to be
lowered due to moderation from
demand side. This demand driven
fall in price could be understood as
follows :
1. Consumer Goods : Prices are
expected to fall only marginally due
to moderation in demand as use of
cards and cheques would
compensate for some purchases.
2. Real Estate and Property : Prices in this
sector are largely expected to fall,
especially for sales of properties
where major part of the transaction is
cash based, rather than based on
banks transfer or cheque transactions.
Effect
On
Prices
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23. IMPACT OF DEMONETIZATION ON INDIAN ECONOMY
• The GDP formation could be
impacted by this measure, with
reduction in the consumption
demand.
• However with the recent rise in
festival demand is expected to
offset this fall in overall impact.
• Moreover, this expected impact
on GDP may not be significant
as some of this demand will only
be deferred will only be deferred
and re-enter the stream once
the cash situation becomes
normal.
Effect On GDP
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24. IMPACT OF DEMONETIZATION ON INDIAN ECONOMY
• With cash transactions facing a
reduction, alternative forms of
payment will see a surge in
demand.
• Digital transaction systems, E-
transactions using E-banking,
usage of Plastic money (Debit
card and Credit cards),etc. will
definitely see substantial
increase in demand.
• This Will Bring More transparency
in System and You can Easily
track Online Money
Transactions.
Effects on Online
Transactions and
Alternative modes
of Payment
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25. WILL DEMONETIZATION SLOW DOWN INDIA’S GROWTH ?
• Yes, Demonetization will slow down growth rate in short term and medium term
because people have less money in hands. So, demand is low, that is why it is
hampering our growth rate. But as soon as people get money, markets will be
back on track.
• But its long term gain is “fictional” or say “disputed”. Some people theoretically
says it will benefit the economy as government will have more revenue but
others say giving a electric shock to the economy when it is already under
distress business sentiment can send it into coma.
• India I a cash based economy and demonetization will temporarily decrease
liquidity in this economy. Decreased liquidity will lead to decreased demand
which will result in the decreased productivity causing a slowdown in consumer
market.
• People have panicked due to sudden demonetization. This will force them to
save and store more money. Thus, a decrease in demand leading to slowdown
in consumer market.
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26. CONCLUSION
 The advantages are much dominating and it will be in the
long term interest of our country comfortably outweighing
the disadvantages.
 Government need to take all the necessary steps so as to
ensure that there will be a smooth flow of currency
exchanges.
 It will make a massive change in our economy.
 We congratulate the entire government and those hidden
brains of our democracy who brought this decision.
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27. REFERENCE
• Textbook : Business Studies (Sandeep Garg)
• Internet : www.google.com
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