Impact of Demonetization on Digital Transactions in India

Abstract

Demonetization is a memorable move of government to restrain shadow economy in the country. Demonetization almost affects every Indian citizen as 86.4% cash in circulation in the form of 500 and 1000 rupee notes has been withdrawn by the government. Its influence has shown on real estate, gold, service sector, agriculture sector, small business units and GDP growth of country etc. According to the economic survey for 2016–17 India's GDP growth rate is predicted to be reduced by 0.25–0.5% during this year. The short run negative impact was also shown on every working sections of the society. After demonetization E-banking gained importance in the country. Low availability of cash opens the door for digital transactions in India. Digital transactions have grown up by 250% after 8 November; 2016. It is a progressive shift towards cashless economy which serves one of the motives behind demonetization policy of government. The aim of this paper is to examine the role of demonetization and growth of digital transactions in India after demonetization.