Open Access Subscription Access
Open Access Subscription Access
Impact of Demonetisation on Indian Economy: An Empirical Investigation
The demonetisation policy declared by the Government of India on 8th November 2016 was aimed at weeding out black money in the economy and putting a check on counterfeit currencies perceived to be used for terror funding. Expanding the base of the formal economy and achieving incremental changes in digital transactions were other two important objectives. But this policy shock was viewed unwarranted as it could potentially distort the economic activities at least in the short run. The pros and cons of this policy have been extensively debated and discussed in the print media and policy circles. However, it is found that there is dearth of empirical evidence on impact of this policy shock on economic activities. In this context, using econometric analysis, the present study found that there was no significant impact of demonetisation on the overall economic growth rather the impact was limited to a few sectors. Similarly, the impact of demonetisation on inflation was more pronounced in the case of food prices only. Nevertheless, an important policy implication of demonetisation has been revolutionisation of digital transactions during the post-demonetisation period.
- Chand, Ramesh and Jaspal Singh, 2016; ‘Agricultural Growth in the Aftermath of Demonetisation’, NITI Aayog. https://niti.gov.in/writereaddata/files/document_publicat ion/Demonetisation_Agriculture_Blog.pdf
- Das, S. K. and P. S. Rawat, 2017; ‘Demonetisation and Indian Economy: Some Macroeconomic Challenges’, Journal of Indian School of Political Economy, Vol. 29, No 3-4.
- Dipankar, D., 2016; ‘Theoretical Analysis of Demonetisation’, Economic & Political Weekly, December 17, Vol 51, No 51.
- Friedman, M., 1994; ‘Money Mischief’, New York: Harcourt Brace & Company.
- Government of India, 2016; "Medium Term Recommendations to Strengthen Payments Ecosystem", Report of the Committee on Digital Payments (Chairman: Shri Ratan Watal), New Delhi, December.
- Government of India, 2017; Economic Survey, Vol. I., 2016-17; ‘Demonetisation: To Deify or Demonize’, Department of Economic Affairs, Minsitry of Finance, Government of India, New Delhi.
- Gupta, A. S., 2017; ‘Impact of Demontisation on MSME. International conference on Paradigm shift in World Economies: Opportunities and Challenges-2017’, Delhi: Enriched Publications Pvt. Ltd.
- Hein, Scott, E. and Mac Ott, 1983; ‘Seasonally Adusting Money: Procedures, Problems and Proposals’, Review, Federal Reserve Bank of St. Louis, November.
- ILO, 2018; ‘Women and Men in the Informal Economy: A Statistical Picture’, Discussion Paper, International Labour Office.https://www.ilo.org/wcmsp5/groups/publ ic/---dgreports/---dcomm/documents/publication/wcms_ 626831.pdf
- IMF, (Several years); International Financial Statistics, Washington, D.C. 20431.
- IMF, (Several Years); Primary Commodity Prices, Washington, D.C. 20431.
- Krishnan, D. and Stephen Siegel, 2017; ‘Survey of the effects of Demonetisation on 28bSlums Neighbourhoods in Mumbai’, Economic and Political Weekly, Vol 52, Issue No. 3.
- Lahiri, Amartya, 2020; ‘The Great Indian Demonetisation’, Journal of Economic Perspectives, Vol. 34, No. 1.
- Mishra and Suresh, 2014; ‘Estimating Employment Elasticity of Growth for the Indian Economy’, RBI Working Paper Series No. 06, 2014, page no-7.
- Mittal, A., 2017; ‘Impact of demonetisation on General Public: An Empirical Study of People’s Experiences during Demonetisation Days’, International Conference on Paradigm shift in World Economies: Opportunities and Challenges. Delhi: Enriched Publications pvt. Ltd.
- MOLE, 2016; Report on ‘Fifth Annual Employment and Unemployment Survey’, Ministry of Labour and Employment, Government of India, New Delhi.
- MOSPI, (Several Years); National Accounts Statistics, Ministry of Statistics and Programme Implementation, Government of India, New Delhi.
- NIPFP, 2016; ‘Demonetisation: Impact on the Economy’, Working Paper No-182, 14 November.
- Office of the Economic Adviser, (Several Years); Department for Promotion of Industry and Internal Trade, Government of India.
- Rajakumar, J.Dennis and S.L. Shetty, 2016; ‘Demonetisation: 1978, the present and aftermath’, Economic and Political Weekly, Vol. 51, No. 48.
- RBI, (Several years); Handbook of Statistics of the Indian Economy, Reserve Bank of India, Mumbai.
- RBI, (Several years); Monthly Bulletin, Reserve Bank of India, Mumbai.
- RBI, 2017; ‘Macroeconomic Impact of Demonetisation- A Preliminary Assessment’, Reserve Bank of India, Mumbai, March 10.
- Sachin, 2017; ‘Effect of Demonetisation on GDP. International Conference on Paradigm Shift inWorld Economies: Opportunities and Challenges-2017’, Delhi: Enriched Publications Pvt. Ltd.
- Singh, C., 2018; "India since Demonetisation", Working Paper, No. 567, Indian Institute of Management, Bengaluru.
- Singh, R. R. and A.Bagchi, 2018; ‘Demonetisation -AGolden Opportunity for Widening the Taxpayer Base’, ICRIER, Working Paper Series 351.
Abstract Views: 571
PDF Views: 1