Demonetisation: A Boon or Bane

Abstract

Demonetization was effectively planned by the think-tank but suddenly declared in an unplanned way to curb black money in Indian economy. The cash ban caused considerable damage to the wheels of the economy in the form of forced unemployment. The Indian informal sector, which provides 80 percent of total employment, was much affected. The reverse migration of work force necessitated them to adopt to a meal per day. Nearly, 2.5 lakh workers in leather industry, 20, 000 workers in diamond industry 15% to 20% of daily wagers in Jewel sector have become jobless. The Gross Domestic Product (GDP) estimate was reduced to 7.1% from 7.6% for the year 2016–17 by the Government itself. The International Monetary Fund (IMF) has also lowered the GDP forecast to 6.6% for 2016–17. New Investments fell by 50% in post cash ban. Rupee value also declined by 1.69% on 15.12.16. The surgical strike on black money has derailed the investors’ confidence in the stock market in the beginning. The cost of Demonetization is estimated at Rs. 4.3 trillion including the GDP losses. The Government felt the impact is transient, but the economists viewed it as firing cannonballs to kill mosquitoes. To conclude, Demonetization is a long pending measure to curb black money. In addition, the govern-ment has to employ in time all other pertinent measures in an exigent mode to make the cash ban a grand success.