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Demonetisation and Social Change

(Vol. 15, No. 2, April-June, 2017) ISSN 0973 – 8444
Demonetisation: A Step for Revitalizing Indian Economy
Ganesh Kawadia1 & Neha Gupta2
1Professor & Head, School of Economics, Devi Ahilya University, Indore. E-mail:
2 JRF- UGC (New Delhi), School of Economics, Devi Ahilya University, Indore. Email:
Abstract: Demonetisation is a monetary process in which the old unit of currency is substituted with newer ones whereas the process of exchanging of old currency with new unit of currency can be termed as Remonetization. Recently, Indian government has scraped high value notes of Rs. 500 and Rs. 1000 in order to weed out black money in the economy and for checking counterfeit currency to crackdown terrorist and naxalite funding. This paper is planned to assess the impact of demonetisation on digitalization and over macro-economic variables viz. price stability, tax collection, and trade balance, By measuring monthly percentage change, it can be evidently concluded that in post demonetisation period, both-fiscal and monetary variables of the economy have improved. As far as fiscal sector is concerned, net tax revenue to GDP in third quarter increased, thereby fiscal deficit and revenue deficit also shrunk. On the monetary side, the value of rupee appreciated in those days and inflation as well experienced reduction in its pace. Rate of interest went lower down and in consequence of it credit demand for real estate, consumer durable and for trade mounted. The most favorable effect of demonetisation is that economy is taking step towards digitalization and cashless economy.
Keywords: Demonetisation, Counterfeit Currency, Cashless Economy, Digitalization, Black Money.
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