A Study on Pre- and Post-Analysis of Demonetization Period: Issues and Challenges

Abstract

The principle pointed of demonetization was to address defilement, black money, fake money and fear financing. The measure impact of demonetization on consumption, production, investment and savings of the economy. Although demonetization have huge potential benefits in the medium to long term working of the economy but caused some short term disruption in the economy. This paper studies the issues and challenges faced by the common man during demonetization period and analyzed the pre- and post-period of demonetization. The investigation in this paper observed that demonetization affected different area of the economy in the month of Nov-16 and Dec-16 and the effect directed fundamentally in Jan-17 onwards. An increase in banks deposits by 15.7% and 14.9% in Nov-16 and Dec-16 respectively created large surplus liquidity conditions. These were overseen by RBI by the monetary policy. There has been a sharp increment i.e. 9.02% in the number of accounts under Pradhan Mantri Jan Dhan Yojana and the deposits in such accounts have also increased. The paper has also studied the impact of demonetization on the new gateway of electronic payment i.e. NEFT, CTS, IMPS and NACH. During Dec-16 and Jan-17 the IMPS registered the maximum y-o-y growth rate of 157.2% and 177.7% respectively.

Keywords: Demonetization, Black Money, Digitalisation, RBI, GDP

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