Demonetization and Indian Economy

Abstract

As the nature of law states “the old is replaced by new one” same is in the case of demonetization. Demonetization is required when there is a change in national currency. After the announcement of demonetization of Rs 500 and Rs 1000 currency notes by our Prime Minister Mr Narendra Modi on November 8, 2016 it would not be considered as a legal tender. It was previously performed in 1946 and 1978. This move is taken towards cashless economy. Cash less economy is a situation where flow of cash does not exist and all transactions are made electronically. Since, India primarily depends on paper currency so it was done in order to keep a check on “black money, Corruption, and counterfeit currency” in the economy. Although the movement had its own benefits but it has certain shortcomings too. The main aim of the study is to analyze the need of demonetization, to find out their advantages and disadvantages along with their impact on the state of Indian economy which is classified into different sectors. The study concludes demonetization has an overall positive impact on the economy of India and suggested some recommendations for their successful implementation.