*Director, Adithya School of Business, Adithya Institute of Technology, Coimbatore, Affiliated to Anna University, Chennai, Tamilnadu
**Professor, Christ University, Bangalore
Online published on 11 October, 2019.
‘Demonetization’ was a shocker to Indians, on the red letter day of 08 Nov 2016. Common man could not understand the ‘demonetized’ shocker for a while, and could not digest the “Demonetization act of stripping two different legal tender units of currencies and the most prominently circulated one the INR 500 Rupee Note and INR 1000 Rupee Note. These units of its status as legal tender were removed overnight. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit. There are multiple reasons why nations demonetize their local units of currency. Some reasons include to combat inflation, to combat corruption, and to discourage a cash system. The process of demonetization involves either introducing new notes or coins of the same currency or completely replacing the old currency with new currency. Demonetization technically is a liquidity shock; a sudden stop in terms of currency availability. It creates a situation where lack of currencies jams consumption, investment, production, employment etc. In this context, the exercise may produce following short term/long term/, consumption/investment, welfare/growth impacts on Indian economy. The intensity of demonetization effects clearly depends upon the duration of the liquidity shocks. Following are the main impacts.
Demonetisation, Black money, Public Policy, Ministry, Positivity, Economy, Indian Mindset
