Impacts of Demonetization on Different Sectors of Indian Economy

Poojan Parikh, Research Scholar, Gujarat University, Ahmedabad

Demonetization is the process of withdrawal of a particular form of a currency from a circulation. It becomes necessary whenever there is change in national currency. The unit of the old currency must be retrieved and replaced with a new currency unit. It involves the either introducing new notes or coins of the same denomination or completely replacing the old denomination with the new denomination. In an important move, the Government of India declared that the five hundred and one thousand rupee notes will no longer be legal tender from midnight, 8 th November 2016. The RBI will issue two thousand rupee notes and new notes of five hundred rupees which will be placed in circulation from 10 th November 2016. This measure has been taken by the Prime Minister in an attempt to address the resolve against the black money, corruption, tax evasion and counterfeit notes. The purpose of the study is to analyse the impact of demonetization on different sector of economy and GDP growth of Indian economy and also to examine the reason behind the demonetization. The study is based on secondary data. The study revealed that the demonetization has negatively affected on most of the sectors of economy. But all these effects are for only short run. These effects are solved when the currency are widely circulated in the economy.

Keywords: Demonetization, Corruption, Black money, GDP growth, Indian economy.

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