Demonetization - Impact on the economy and financial inclusion

Financial Inclusion is a holistic approach to provide desired the financial services to the poor who are financially excluded. United Nations initiated the measures to have access to a wide range of financial services which comprise of savings, credit, insurance, remittance and other banking/payment services to all ‘bankable’ households and enterprises at a reasonable cost. This initiative is vital for the economic growth of any country especially in India as most of the population are residing in the rural areas and the availability of these financial services will make the rural households equipped with the funds which enhance their livelihood. In India most of them are financially excluded as they are financially illiterate and are dependent on informal sources to meet their financial expenses. Financial inclusion is opined to be a key initiative for an inclusive growth. Though the progress is good but it is a long path to achieve the digital financial inclusion. Government of India had taken several steps to promote inclusive growth as a part of it had taken the initiation of demonetization to tackle black money and at the same time to move towards cashless digital economy. The paper tries to make an effort to study the effect of demonetization on the financial inclusion path and perception of the section of the people about the initiative taken by the government.