Demonetization (8th November 2016): Its Impact without any Prejudice

Abstract

The RBI Act empowers the central government to demonetise any series of bank notes, but the government can take this decision only on the recommendation of the RBI (monetary authority of the country). The government and RBI in consultation took the decision to demonetise 86 percent of Indias cash in circulation (500 and 1000 rupee bank notes) to tackle endemic corruption and counterfeits used by terrorist and other anti social groups. Parallel economy could be named as black, unaccounted, illegal, unsanctioned economy and its impact are loss of revenue to the state exchequer, consumption of non essential items, investments in unproductive channels like jewellery, bullion, real estate, luxury housing and transfer of funds from India through violation of foreign exchange rules and regulations is an outcome of corruption. The main objective of this paper is to examine the impact of recent demonetisation on the nations economy through the analysis of secondary data. Normalcy has returned to the currency system post demonetisation on the pace of cash withdrawals has come down. The success of demonetisation is not known to the monetary authority of the country, but it claims that the move of demonetisation was well planned.

Keywords: Sectoral cleanup, wider tax net, Stemming Illicit outflows, Cashless society, Curb Counterfeiting.

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