Demonetization in India: An Overview

Abhinav Singh Chandel, Rishabh Sharma

Abstract


The Government of India has implemented a major economic decision of demonetizing high value currency notes of Rs. 500 and Rs. 1000. The rationale given behind this is that it would curb black money and its flow as most of it would get invalidated. This proposition, however, is not backed by any evidence or proof and therefore portends distinct long-term, medium-term and short-term complications. This makes it imperative to assess the challenges such a shock is expected to have on functioning of the Indian economy, which may vary according to the extent of re-monetisation that would follow-up. This paper tries to explain the repercussions of such a move on the obtainability of credit, spendings and extent of economic activities, particularly in India. The research conducted has a descriptive and analytical nature to it. The paper also seeks to elucidate the implications of demonetization in developing economies like India.

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