Presented By:

Abhishek Kumar Mishra

Ayushi Guha
Nehal Jain
Roopam Goyal
Shalini Dixit
 Discontinuing particular denomination as legal tender.
 Getting fake currency out of circulation
 Controlling inflation
 Tax Collection
 The move to digital currency
 Improved deposits and savings in financial institutions
 Stopping fraudsters
 Reducing illegal activities
 Growth in a country’s GDP
 Introducing new bank note designs
 A measure of good governance practices
 Little cash in circulation
 Inconvenience and annoyance to the public
 Slowdown in Economic Growth
 Disruption of Trade
 Problems with paying bills
 ATMs have to be re-calibrated
 Short term financial crisis for poor people
 Countries that Experienced successful demonetization

European Union (2002)

Pakistan (2016)
Zimbabwe (2015)
Australia (1996)
United Kingdom (1971)
Countries that Experienced unsuccessful
demonetization
North Korea (2010)
Soviet Union (1991)
Myanmar (1987)
Nigeria (1984)
Ghana (1982)
 Elimination of counterfeit currency
 Black money
 Strengthen Indian Banking System
 Tax Collection
 Digital Payments
 Terrorism and internal security
 There was immediate and sharp jump in the digital payments in November–
December 2016 owing to shortage of cash.
 The debit card point of sale transactions was twice the size of value suggested by
trend before the demonetization. The value of credit card increased but no sharp
growth was seen.
 The mobile wallet transactions picked immediately after the demonetization
followed by dip in mid-2017 due to easing cash shortage. There was again sharp
rise thereafter.
 By April 2018, the volume of the digital payments had doubled. After return of the
cash, the growth in digital payment had been modest.
The number of income tax returns filing increased from
43.3 million to 52.9 million between financial year 2016 and
2017 which was not a significant increase compared to
increase between 2015 and 2016.

Indian Micro Small and Medium Enterprises (MSME) sector contributes

considerable share in India’s GDP. The move demonetization has hampered micro
businesses in a bad manner resulting into slowdown in micro enterprise sector.
 Online businesses saw upto a 30% decline in cash on delivery (COD) orders. Several
e-commerce companies hailed the demonetization decision as an impetus to an
increase in digital payments. They believe that it would lead to a decline in COD
returns which is expected to cut down their costs. The demand for point of sales (POS)
or card swipe machines increased.

Agriculture sector heavily dependent on cash and were adversely affected by the
demonetization. Due to scarcity of the new banknotes, many farmers have insufficient
cash to purchase seeds, fertilisers and pesticides. The shortage of cash led to plunge in
demand which in turn led to a crash in the prices of crops. Farmers were unable to
recover even the costs of transportation from their fields to the market from the low
prices offered.
 There was a loss of jobs due to demonetization, particularly in the unorganized and
informal sector and in small enterprises. Migrant workers were adversely affected by
demonetization
 According to the report prepared by Centre for Monitoring Indian Economy (CMIE),
the number of employed people was 401 million in January–April 2016, 403 million
during May–August 2016, 406.5 million in September–December 2016. After
demonetization in November 2016, the number fell to 405 million in January–April 2017.
So there was fall of 1.5 million in number of people employed.
 After demonetization, there was an increase in the counterfeit banknotes in small
denomination of ₹100 and ₹50.
 The counterfeit banknote in denomination of old ₹500 and ₹1000 saw increase in 2016-
17 and decline in 2017-18 because they were already demonetized. But in 2017-18,
there was an increase in counterfeit banknotes of new ₹500 and ₹2000 denomination
banknotes than the previous year.
 There has been no significant change in the number of detection of counterfeit
banknotes detected. In 2017-18, the number of detection was close to the level before
demonetization levels.
 Additionally, after demonetization, only 0.0035% of the ₹1000 banknotes were found to
be counterfeit
 The scarcity of cash due to demonetization led to chaos, and people faced difficulties
in depositing or exchanging the demonetized banknotes due to long queues outside
banks and ATMs across India. The ATMs were short of cash for months after
demonetization.

The All India Motor Transport Congress claimed that about 800,000 truck drivers and
conductors were affected with shortage of cash, with around 400,000 trucks stranded at
major highways across India. The Ministry of Road Transport and Highways
subsequently announced a suspension of toll collections on all national highways
across the country until 2 December as well as acceptance of demonetized ₹500
banknote as a toll from 2 to 15 December.
As a combined effect of demonetization and US presidential election, the stock market
indices dropped to an around six-month low in the week following the announcement.
The day after the demonetization announcement, BSE SENSEX crashed nearly 1,689
points and NIFTY 50 plunged by over 541 points.

There was a reduction in industrial output as industries were hit by the cash shortage.
The growth in eight core sectors such as cement, steel and refinery products, which
constitute 38% of the Index of industrial production (IIP), was only to 4.9 percent in
November 2016 as compared with 6.6 percent a month ago.
 No transaction fee on digital payments
 0.75% discount on fuels
 Discount on policies sold online
 No cess on cashless payments less than 2000
 GDP growth has decelerated over the last four quarters, from 7.9%

growth in Q2 2016 to 5.7% in Q2 2017. By comparison, most of the

rest of the world began to see a pick-up in Q3 2016.

 The Centre for Monitoring Indian Economy (CMIE), a private

forecaster, estimates that 1.5 million jobs were lost between January
and April 2017, as the employment level fell to 405 million people.
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