INTRODUCTION

November 8 2016 a day when the Indian government launched a surprise

attack/surgical strike/surgery against black money in the economy

The honorable prime minister of India, in an unscheduled live televised

address to the nation on November 8, 2016 at 20:15 Indian standard time
(IST) declared circulation of all INR 500 and INR 1000 banknotes of the
Mahatma Gandhi series as invalid with immediate effect

Issuance of new INR 500 and INR2000 banknote of the Mahatma Gandhi
new series in exchange for the old banknotes was announced

With exchange of new denomination notes INR2000 and not INR1000, the
conversion of black money would be curbed.

Demonetization has been done in an effort to:

-stop counterfeiting of the current bank notes allegedly used for funding
terrorism
-crack down on black money in the country.
  SIMILAR DENOMINATION HAS BE DONE IN THE
PAST. IN INDIA, IT HAS BE DONE BEFORE
1)In January 1946 wherein banknotes of INR1000 and
INR10,000 were withdrawn

2) in January 1978 wherein banknotes of INR1000, INR5000

and INR10000 were demonetized.

 In 2012 the central board of direct taxes (CBDT) has

recommended against demonetization, considering
demonetization not to be a solution for tackling
black money or economy, which is largely held in the
form of benami properties, bullion and jewelry.
 Difference in demonetization in 2016 with that of
BACKGROUND earlier ones is obviously very large in the size.
Previous ones barely impacted common people
but this one was huge with 85 percent of currency
crossed out of the system.
BACKGROUND
Demonetisation has been embraced in the past by several other
countries. They include:

Country Year Denomination

United States 1969 $10,000 and $1000
Ghana 1982 50 Cedi's
Zimbabwe 2010 100 Trillion Dollar
Myanmar 1987 25-, 35- and 75- Kyat notes
Australia 1996 Full series of Polymer Bank Notes
Impact of Demonetisation on
Common Man
Negative Impact
•Inconvenience
1)Exchanging of notes.
2) Transaction Limit of Rs.4000/- per day.
3)People who an below poverty line segment who get paid only in cash but
might have no bank account
•Consumer spending decrease- If a person does not have money on their hands
then he can’t buy anything.
•Decline in GDP growth
Year Currency/GDP M3/GDP Money Multiplier
2011-12 11.09 79.77 5.05
2012-13 10.91 79.48 5.4
2013-14 10.6 79.68 5.64
2014-15 10.56 80.49 5.73
2015-16 10.86 81.98 5.66
Accounted Income

Deposit in Bank

Temporary
Inconvenience
Unaccounted Income

 Declared money/ Tax income- This is the

income before deduction and abatement
granted by the tax legislation.
 Money laundering- Changing black
money to white money.
 Worthless money- Non traceable money.
Flow chart of Cash
flow under
Demonetisation
Benefits in general
1) Black money holder will be under the radar.
2) Reducing inflation in day to day life.
3) Lower borrowing cost .
4) Organized sector getting benefited.
5) Increase in cash-less transactions.
6) Easy home loans at Affordable interest rate
decrease 6% .
Graphical Study of Effects of Demonetisation
Public Opinion for
Demonetisation
Basically there are 5 Major types of
Responses recorded on the Survey
for Demonetisation.
1) Brilliant 72.84%
2) Nice 16.16%
3) It’s Okay 5.5%
4) Could Improve 3.3%
5) Bad Exp. 2.2%

Nice Its Okay Could Improve Bad Exp. Brilliant

Interests in GOLD
A

In times of financial uncertainty, there’s a flight to the safety of gold. In the week after
demonetization, searches for the query “gold” reached their highest point in a year, but
have been restored to their original levels. After the announcement, backdated gold
purchases were thought to be a clever way to evade the tax authorities, but repeated raids
on jewelers across the country, and the government’s move to ask for PAN details while
making gold purchases, seems to have dampened the trend.

‘A’ Denotes here a sudden spike in Interest in “GOLD” query after Demonetisation.
‘B’ Denotes return to normal Interest in “GOLD” query after Government’s regulation on Gold
Purchases.
Interests in HAWALA
B

“Hawala” jumped 1566% on 9th November. Hawala is an informal and illegal money
transferring system through a network of connected brokers, and is frequently used
to launder black money. The government has long maintained that Indians hold black
money in large amounts, and sure enough, in the week following the announcement,
Indians seemed to turn to Google to search for hawala operators – in expectedly large
numbers.
‘A’ denotes maxima of interest in Hawala in past 5 years of Pre-Demonetisation time on 7 Feb.

‘B’ denotes maxima of interest in Hawala in past of years, and it comes under Demonetisation period.
Interests in PayTM, FreeCharge and Mobikwik

Within the three major wallet companies, an interesting battle played out.
Before the move, Paytm was the clear market leader with over 13 crore
users; Freecharge and Mobikwik followed at number two and three. And in
the post-demonetization world, Paytm built on its early advantage. It was the
first company to come out with a print ad, and also came up with innovative
advertising that helped merchants get onboard on its platform. Interest in
Paytm surged 67%. In comparison, interest in Freecharge and Mobikwik rose
23% and 25% percent respectively.
Interests in ATMs
C

A
B

A simple drive down the roads will show you the long, winding queues outside ATMs.
Online interest in ATMs too has surged – Google launched an Find an ATM near you
button on its site, and several apps came up with promised to tell you which ATMs in
your vicinity were working. Interest for ATMs on Google was up to its highest point in 5
years – by over 500 percent.

‘A’ denotes Maximum Interest in Pre-Demonetisation in 17 – 23 November 2013

‘B’ denotes Beginning Point of Beginning of Demonetisation on 5 November 2016
‘C’ denotes Maximum Interest in ATMs of all times due to Demonetisation effect
Interest in UPI B

The government United Payments Interface has had the same problem as most well intentioned
government schemes – a big bang launch, but no real traction since then. The demonetization effort
might breathe new life into UPI apps. UPI, unlike wallets, doesn’t hold cash, but can be used to
transfer amounts from one bank account to another. Searches for UPI are up, and maybe UPI apps
can finally seize this moment.

‘A’ denotes Public Interest in UPI in Pre-Demonetisation on 6 November 2016

‘B’ denotes maximum point in Public Interest in UPI on date 11 December 2016 (After Demonetisation)
Drawbacks Losses to small vendors because of cash
crunch.
Many people died because some hospitals did
not accepted old money and rejected to treat
them.
Repeatedly changes in the rule and misleading
to the people.
Many people do not have bank account in rural
areas and hilly areas.
Lots of daily basis labors removed from the
work.
 Benefits
• Possible to counterfeit currency using for the terrorist
activity.
• Black money: by sudden demonstration of higher
currency, it took out illegal stored money from the holders.
• Transparency : moving toward the digital economy is now
bringing a more transparency in the system.
• Easy monitoring of digital payments, easy to monitor cash
flow.
• Less chance to avoid the taxes.
• Transparency in the system will bring more invest from
the foreign countries.
The Man Behind Demonetisation
The Person who took India from Evolution to Revolution !

Our Beloved and Honourable Prime Minister of India

Shri Narendra Damodardas Modi
 Credits

Aman Bhal Solanki Data Collection & Research

Mohd Nawazish Khan Designing and Compilation

Siddharth Jain Research and Data Organising

Sarthak Jain Review and Data Input