Study of the Impact and Effects of Demonetization on the Economy System of the Indian Population.

Abstract

Demonetization is a situation where the Central Bank of the country withdraws the old currency notes of certain denomination as an official mode of payment.  According to investopedia Demonetization means the act of stripping a currency unit of its status as legal tender. There are multiple reasons why nations demonetize their local units of currency. Some reasons include to brush-off inflation, to brush- off corruption, and to dispirit a cash system. The process of demonetization involves either introducing new notes of the same currency or completely replacing the old currency with new currency. Indian government adopted demonetization on 08 November 2016 to tackle with black money and make India a cashless digital economy. As per the yearly report of Reserve Bank of India of 31 March 2016 that total currency notes in circulation is 16.42 lac crore of old Rs. 500 and  Rs.1000 banknotes. As per the report of RBI dated on 14-12-2016, the total amount of old notes of value of Rs. 12.44 lac crore has been deposited by the customers till 10-12-2016. Banks started accepting deposits from 10 November but within a period of 15 days approximately half money has been received by the banks.