Chapter-1: Impact of Demonitization On Middle and Lower Income Group

IMPACT OF DEMONITIZATION ON MIDDLE AND LOWER INCOME GROUP
CHAPTER-1
INTRODUCTION
1.1INTRODUCTION TO FINANCE
In our present day of economy, finance is referred as the provision of money at the time
when it is required. Every enterprise whether big, small or medium needs finance to carry on its
operation and achieve its targets. In fact, finance is so indispensable that it is rightly said to be the
“Life blood of an enterprise”. Without adequate finance, an enterprise cannot think of its existence.
The study of principles, practices, procedures and problems concerning financial management of
profit making organization engaged in the fields of industry, trade and commerce is undertaken
under the discipline of “BUSINESS FINANCE”.
1.1.1 BUSINESS FINANCE

Literally speaking, the term ‘business finance’ connotes finance of business activities. The
term business finance is composed of two words business and finance. Thus it is essential to
understand the meaning of these two words, which is the starting point to develop the whole
concept of finance.
1.1.2 MEANING OF BUSINESS

The word business may be interpreted in one way as “State of being busy”. All human
creative activities relating to the production and distribution of goods and services for satisfying
human needs are known as business. It also includes all those activities which indirectly help in
production and exchange of goods such as transport, insurance, banking etc.
1.1.3 MEANING OF FINANCE

Finance is referred to as the provision of money at a time when it is required. Finance
refers to the management of flow of money through an organization. It concerns with the
application of skills in the manipulation, use and control of money.
Having studied the meaning of business and finance, we can develop the meaning of the
term business finance as an activity, which is concerned, with the acquisitions of funds, use of
AL-AMEEN ARTS, SCIENCE AND COMMERCE COLLEGE Page 1

funds and distribution of profits by a business firm. Thus business finance deals with the
acquisition, application, allocation of funds and financial control.
1.1.4 DEFINITION OF BUSINESS FINANCE

In simple words, business finance can be defined as the process of rising, providing
and administering of all money/ funds to be used in corporate (business) enterprise.
According to Guttmann and Doug all, business can be broadly defined as the activity
concerned with planning, raising, controlling and administering the funds used in the business
Wheeler defines business finance as “that business activity, which is concerned with the
acquisition and conservation of capital funds in meeting the financial needs and overall objectives
of business enterprise”.
According to Prather and wert “business finance deals with primarily with raising,
administrating and disbursing funds by privately owned business units operating in non- financial
fields of industry.
1.2 INTRODUCTION TO DEMONITIZATION

On 8 November 2016, the Government of India announced the demonetization of

all ₹500 (US$7.40) and ₹1,000 (US$15) banknotes of the Mahatma Gandhi Series. The
government claimed that the action would curtail the shadow economy and crack down on the
use of illicit and counterfeit cash to fund illegal activity and terrorism. The sudden nature of the
announcement—and the prolonged cash shortages in the weeks that followed—created
significant disruption throughout the economy, threatening economic output. The move was
heavily criticized as poorly planned and unfair, and was met with protests, litigation, and strikes.
Prime Minister of India Narendra Modi announced the demonetization in an unscheduled

live televised address at 20:00 Indian Standard Time (IST) on 8 November. In the
announcement, Modi declared that use of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi
Series would be invalid past midnight, and announced the issuance of new ₹500
and ₹2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.
The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on the very next day
after the announcement. In the days following the demonetization, the country faced severe cash
shortages with severe detrimental effects across the economy. People seeking to exchange their
bank notes had to stand in lengthy queues, and several deaths were linked to the inconveniences
caused due to the rush to exchange cash.
Initially, the move received support from several bankers as well as from some
international commentators. It was heavily criticized by members of the opposition parties,
leading to debates in both houses of parliament and triggering organized protests against
the government in several places across India. The move is considered to have reduced the
country's GDP and industrial production. As the cash shortages grew in the weeks following the
move, the demonetization was heavily criticized by prominent economists and by world media.
In India’s case, the move has been taken to curb the menace of black money and fake
notes by reducing the amount of cash available in the system. It is also interesting to note that
this was not the first time the Government of India has gone for the demonetization of high-value
currency. It was first implemented in 1946 when the Reserve Bank of India demonetized the then
circulated Rs 1,000 and Rs 10,000 notes. The government then introduced higher denomination

banknotes in Rs 1000, Rs 5000 and Rs 10000 in a fresh avatar eight years later in 1954 before
the Morarji Desai government demonetized these notes in 1978.
1.2.1 MEANING
Demonetization is the act of stripping a currency unit of its status

as legal tender. Demonetization is necessary whenever there is a change
of national currency. The old unit of currency must be retired and replaced with a
new currency unit. The opposite of demonetization is remonetization where a
form of payment is restored as legal tender.
Demonetization is a radical monetary step in which a currency
unit’s status as a legal tender is declared invalid. This is usually done whenever
there is a change of national currency, replacing the old unit with a new one. Such
a step, for example, was taken when the European Monetary Union nations
decided to adopt Euro as their currency. However, the old currencies were
allowed to convert into Euros for a period of time in order to ensure a smooth
transition through demonetization. Zimbabwe, Fiji, Singapore and Philippines
were other countries to have opted for currency demonetization.
Denomination is a proper description of a currency amount,
usually for coins or banknotes. Denominations may also be used with other means
of payment like gift cards. For example, five euros is the denomination of a five
euro note.
1.2.2 DEFFINITION
Demonetization for us means that Reserve Bank of India has

withdrawn the old Rs 500 and Rs 1000 notes as a official mode of payment.
According to Investopedia, demonetization is the act of stripping a currency unit
of its status as legal tender.
Ending something (e.g. gold or silver) as no longer the legal tender
of a country.

Process of removing a currency from general usage, or

circulation. Gold was demonetized in this way when it ceased to be used as an
everyday currency.
1.2.3 BACKGROUND
There are multiple reasons why nations demonetize their local units of currency. Some
reasons include to combat inflation, to combat corruption, and to discourage a cash system. The
process of demonetization involves either introducing new notes or coins of the same currency or
completely replacing the old currency with new currency.
The Indian government had demonetized bank notes on two prior occasions—once in
1946 and then again in 1978—and in both cases, the goal was to combat tax evasion by "black
money" held outside the formal economic system. In 1946, the pre-independence government
hoped demonetization would penalize Indian businesses that were concealing the fortunes
amassed supplying the Allies in World War II. In 1978, the Janata Party coalition government
demonetized banknotes of 1000, 5000 and 10,000 rupees, again in the hopes of
curbing counterfeit money and black money.
In 2012, the Central Board of Direct Taxes had recommended against demonetization,
saying in a report that "demonetization may not be a solution for tackling black money or
economy, which is largely held in the form of benami properties, bullion and
jewellery." According to data from income tax probes, black money holders kept only 6% or less
of their wealth as cash, suggesting that targeting this cash would not be a successful strategy.
On 28 October 2016 the total banknotes in circulation in India was ₹17.77

trillion (US$260 billion). In terms of value, the annual report of Reserve Bank of India (RBI) of
31 March 2016 stated that total bank notes in circulation valued to ₹16.42
trillion (US$240 billion) of which nearly 86% (around ₹14.18 trillion (US$210 billion)) were
₹500 and ₹1,000 banknotes. In terms of volume, the report stated that 24% (around 22.03 billion)
of the total 90266 million banknotes were in circulation.
In the past, the Bharatiya Janata Party (BJP) had opposed demonetization. BJP
spokesperson MeenakshiLekhi had said in 2014 that "The aamaurats and the aadmis (general

population), those who are illiterate and have no access to banking facilities, will be the ones to
be hit by such diversionary measures."
In June, the Government of India had devised the Income Declaration Scheme, that lasted
till 30 September 2016, providing an opportunity to citizens holding black money and undeclared
assets to avoid litigation and come clean by declaring their assets, paying the tax on them and a
penalty of 45% thereafter.
In 2016, the Indian government decided to demonetize the 500- and 1000- rupee notes,
the two biggest denomination notes. These notes accounted for 86% of the country’s cash
supply. The government’s goal was to eradicate counterfeit currency, fight tax evasion, eliminate
black money gotten from money laundering and terrorist financing activities, and promote a
cashless economy. By making the larger denomination notes worthless, individuals and entities
with huge sums of black money gotten from parallel cash systems were forced to convert the
money at a bank which is by law required to acquire tax information from the entity. If the entity
could not provide proof of making any tax payments on the cash, a tax penalty of 200% of the
tax owed was imposed.
In 2015, the Zimbabwean government demonetized the Zimbabwean dollar as a way to

combat the country’s hyperinflation that was recorded at 231,000,000%. The 3-month process
involved expunging the Zimbabwean dollar from the country’s financial system and solidifying
the US dollar, Botswana pula, and South African rand as the country’s legal tender in a bid to
stabilize the economy.
Another example of demonetization occurred when the nations of the European Monetary
Union adopted the euro in 2002. In order to switch to the euro, authorities first fixed exchange
rates for the varied national currencies into euros. When the euro was introduced, the old
national currencies were demonetized. However, the old currencies remained convertible into
euros for a while so that a smooth transition through demonetization would be assured.
The Coinage Act of 1873 demonetized silver in favor of adopting the gold standard as the
legal tender of the United States. The withdrawal of silver from the economy resulted in a
contraction of the money supply, which subsequently led to a 5-year economic depression in the

country. In response to the dire situation and pressure from silver miners and farmers, the Bland-
Allison Act remonetized silver as legal tender in 1878.
1.2.4 OBJECTIVES
1) Removing black money from country:
India has a huge parallel black economy which the government can’t tax and which
forms an island away from the main economy. Nobody knows the exact figure but it has been
estimated to be in the range tens of thousands of crores of Rupees in the past to lakhs of
crores today. You can be sure that a good chunk of this will come into the main economy. It
is a Herculean task to merge the two streams of white and black money and a great beginning
has already taken place.
2) Stopping of corruption: by removing the currency notes from circulation, it will have
a direct impact on corruption. People who have this notes will now be left with nothing.
3) Stopping terror funds: because of demonetization, the people or organizations who

used to fund terror groups will be now sitting without any works, they will naturally die and that
too with starvation.
4) Curbing fake notes: demonetization will also stop the circulation of fake notes in the
economy (although the amount of fake notes revolving in the economy was around 400 crores).
5) Stopping illegal dabba trading: due to demonetization, the illegal share trading and
dabba trading will cease to exist. This will ensure stability in share markets,especially at these
'times of turbulence'
6) The Uttar-Pradesh elections: it is generally seen that, there is ample liquidity in the
states, where elections are to happen, this thing is considered as vote bank and politicians buy
votes of people by offering them money, if they vote for them. now because of demonetization,
vote bank system will not be in existence (the proof here is currency notes, which were found
from river ganga). as an ultimate result, we would see transparent elections.

7) The betting on US presidential election results: it seems that Modiji is well aware of
the fact that Indians are a master in betting at anything like pro!!!! Because of his address to
nation at 8:00 pm, there will be no betting done on the us presidential election results, or at least
its quantum would be less than, what it should be have earlier..
8) To send a clear message that this government is well inclined towards working for
the development of nation: because of his bold step, it will send a clear message that this
government is well inclined towards development of nation. it will also send a message to the
international community, that the government is doing constant efforts to make India a better
place to invest and a better place to do business.
1.2.5 POSITIVE AND NEGATIVE IMPACTS OF DEMONETIZATION ON THE

INDIAN ECONOMY
At the stroke of the hour on midnight of 9th November 2016, India lost 86% of its
monetary base. The print, electronic and social media has been praising Prime Minister’s
masterstroke by which he has reportedly destroyed the base of corruption in India. In this single
move, the Government has attempted to tackle all the three issues affecting the economy i.e. a
parallel economy, counterfeit currency in circulation and terror financing. There is no doubt that
Prime Minister has pulled out a major coop and substantially enhanced his reputation as a strong
leader. The idea of demonetization is good but it has to be taken into consideration that most of
the black money is kept in the form of land, buildings or gold or kept abroad. What is in cash
constitutes only 4% of the total amount of black money on which taxes are not being paid. Out of
this, a lot of money is in circulation in everyday transaction like if someone is building a house;
the bill is not paid through banks for sand, bricks etc. This money goes into the other systems
though it has been drawn from bank. These things will come under control with this step. Small
farmers, sellers, merchants, daily wage laborers and traders are suffering because of lack of
proper planning, intelligence and foresight such as recalibration of ATM machines. There was
need to pile up enough 100 Rupee notes and other smaller denomination notes in the market
before taking this step. It is being said by critics that this step was taken only to bolster the image
of the Prime Minister as he has been unable to deliver on GDP growth, inflation and bringing the
black money from abroad. Demonetization is an established practice in monetary policy to tackle

black money. The Prime Minister has explained why this is a financial surgical strike. It was
meant to be suddenly implemented. In the past, demonetization has taken place twice but it fails
because the idea is to tackle the black money existing in circulation. This is not tackle corruption
per se or the Government is not saying that 100% corruption will be tackled. If announcement
and time would have been given, this step might not have been successful in controlling black
money and counterfeit currency in circulation coming from Pakistan, Nepal or other countries.
People are facing problems because the limit of withdrawal has not been kept at a higher level. If
this would have been kept at a higher level, there were chances that the recycling of black money
might begin. The ideal money in circulation has to come to the banking channels. It is also being
said that what is being attempted is replacement of currency and not demonetization itself which
was unnecessary. This is a terrible setback for the international standing of the Indian economy.
At this time, the economy is struggling with slowdown. There is demand sluggishness in the
economy leading to practically no private sector investment and stagnant industrial growth.
If we look at the farm sector, this is the harvest time. Farmers generally deal in cash and
India is also largely a cash economy. The cash transactions in this economy are far more than the
total number of electronic transactions done on a daily basis. In the tribal heartland of the
country, the poor people through middlemen are getting their currencies exchanged for Rs.300 or
Rs.400 because of lack of proper information which is hitting them. The stock of the black
economy constitutes a major part of the GDP is significant. Even if 50% of this amount is
withdrawn, the kind of relief that RBI will get on its liabilities and the sort of deposits
commercial banks will get will lead to a rise in the deposit and later on there will be decrease in
lending rates plus fiscal deficit. The black money in circulation is like a steroid in the economy
which keeps the demand going gives a feeling that everything is working well. The problem is
that investment is not taking place in the economy and the rate of growth of capital formation is
down. The only way to bring this up is to divert more funds into investments which will happen
when the cost of capital comes down.
1.2.6 POSITIVE EFFECT
Human trafficking

Nobel laureate Kailash Satyarthi and others working to fight human trafficking said that
the note ban had led to a huge fall in sex trafficking. Satyarthi said the demonetization would be
effective in combating exploitation of children as well as corruption and would be a great
obstacle to traffickers. However, 2 months later he expressed his disappointment on Rs 2000
notes being pushed into human trafficking in absence of other concrete steps.
Radical groups
The Demonetization has badly hit Maoist and Naxalites as well. The surrender rate has
reached its highest since the demonetization is announced. It is said that the money these
organizations have collected over the years have left with no value and it has caused them to
reach to this decision.
The move also reportedly crippled Communist guerrilla groups (Naxalites) financing
through money laundering. On 10 November the police arrested a petrol pump owner at Ranchi
when he reportedly tried to deposit ₹2.5 billion, belonging to a person affiliated with the
banned Communist Party of India (Maoist). According to Chhattisgarh Police demonetization
has affected the Naxalite activities. It is reported that insurgents have stashed more than
₹70 billion in the Bastar region.
While Manohar Parrikar claimed that the move has also helped in reducing the incidents
of stone-pelting in the Kashmir valley, his claim has been disputed.
Hawala
Mumbai Police reported a setback to Hawala operations. Hawala dealers in Kerala were
also affected. The Jammu and Kashmir Police reported the effect of demonetization on hawala
transactions of separatists.
Railways
As of November 2016, Indian Railways did not have the option to make payment with
cards at the counters. After the demonetization move, the government announced to make card
payment options available at railway counters in the country.The railways placed an order for
10,000 card reader machines in January 2017.
1.2.7 NEGATIVE EFFECT

Cash shortage
The scarcity of cash due to demonetization led to chaos, and most people holding old
banknotes faced difficulties exchanging them due to endless lines outside banks and ATMs
across India, which became a daily routine for millions of people waiting to deposit or exchange
the ₹500 and ₹1000 banknotes since 9 November.ATMs were running out of cash after a few
hours of being functional, and around half the ATMs in the country were non-
functional. Sporadic violence was reported in New Delhi, but there were no reports of any
grievous injury, people attacked bank premises and ATMs, and a ration shop was looted
in Madhya Pradesh after the shop owner refused to accept ₹500 banknotes.
The CMD of Punjab National Bank said that panic after demonetization started fading on
19 November 2016. As of 18 December 2016, there were still long queues at banks and
ATMs. Three months after the withdrawal of banknotes, a quarter of the ATMs were still short
of cash.
Deaths
Several people were reported to have died from standing in queues for hours to exchange
their old banknotes. Deaths were also attributed to lack of medical help due to refusal of old
banknotes by hospitals. As of 15 November 2016, the attributed death toll was 25. and 33 deaths
as of 18 November. In an interview, Chief Minister of Delhi Arvind Kejriwal lashed out at a
BBC reporter who asked him to justify his 19 November claim that 55 deaths were linked to
demonetization. By the end of the year, opposition leaders claimed that over 100 people had died
due to demonetization.
Stock market crash
As a combined effect of demonetization and US presidential election, the stock market

indices dropped to an around six-month low in the week following the announcement. The day
after the demonetization announcement, BSE SENSEX crashed nearly 1,689 points and NIFTY
50 plunged by over 541 points. By the end of the intraday trading section on 15 November 2016,
the BSE SENSEX index was lower by 565 points and the NIFTY 50 index was below 8100
intraday.

Transportation halts
After the demonetization was announced, about 800,000 truck drivers were affected with
scarcity of cash, with around 400,000 trucks stranded at major highways across India were
reported. While major highway toll junctions on the Gujarat and Delhi-Mumbai highways also
saw long queues as toll plaza operators refused the old banknotes.
Nitin Gadkari, the Minister of Transport, subsequently announced a suspension of toll

collections on all national highways across India until midnight of 11 November, later extended
until 14 November and again until midnight of 18 November, and yet again till 2 December.
Agriculture
Transactions in the Indian agriculture sector are heavily dependent on cash and were
adversely affected by the demonetization of ₹500 and ₹1,000 banknotes. Due to scarcity of the
new banknotes, many farmers have insufficient cash to purchase seeds, fertilizers and pesticides
needed for the plantation of rabi crops usually sown around mid-November. Farmers and their
unions conducted protest rallies in Gujarat, Amritsar and Muzaffarnagar against the
demonetization as well as against restrictions imposed by the Reserve Bank of India on district
cooperative central banks which were ordered not to accept or exchange the demonetized
banknotes.
Dumping of agricultural produce
The demonetization led to unavailability of cash to pay for food products. The reduction
in demand that arose in turn led to a crash in the prices of crops. Farmers were unable to recover
even the costs of transportation from their fields to the market from the low prices offered.The
prices dropped as low as 50 paise per kilo for tomatoes and onions. This forced the farmers
across the country to dump their products in desperation. Some farmers resorted to burying
unsold vegetables. Agricultural produce such as vegetables, foodgrains, sugarcane, milk and
eggs were dumped on roads. Some farmers dumped their produce in protest against the
government.

Banking
In the first four days after the announcement of the step, about ₹3 trillion (US$45 billion)
in the form of old ₹500 and ₹1,000 banknotes had been deposited in the banking system and
about ₹500 billion (US$7.4 billion) had been dispensed via withdrawals from bank accounts,
ATMs as well as exchanges over the bank counters. Within these four days, the banking system
has handled About 180 million transactions. The State Bank of India reported to have received
more than ₹300 billion (US$4.5 billion) in bank deposit in first two days after demonetization.A
spike in the usage of debit card and credit card post demonetization was also reported.
Between November 10 and November 27, banks reported exchange and deposits of
demonetized banknotes worth ₹8.45 trillion (US$130 billion) (exchange of ₹339.48
billion (US$5.0 billion) and deposits of ₹8.11 trillion (US$120 billion)). During this period, an
amount of ₹2.16 lakh crore (US$32 billion) had been withdrawn by people from their accounts.
In Malda, a district believed to be a transit-point for fake Indian currencies,a large sum of
cash deposits in dormant accounts were also reported. According to The Economic Times, more
than 80 percent of fake currency in India originates from Malda district in West Bengal.
Business
By the second week after demonetization of ₹500 and ₹1,000 banknotes, cigarette sales
across India witnessed a fall of 30–40%,while E-commerce companies saw up to a 30% decline
in cash on delivery (COD) orders. Several e-commerce companies hailed the demonetization
decision as an impetus to an increase in digital payments. They believe that it would lead to a
decline in COD returns which is expected to cut down their costs.
The demand for point of sales (POS) or card swipe machines has increased.E-payment
options like PayTM and Instamojo Payment Gateway, PayUMoney has also seen a
rise. According to data of Pine Labs, the demand for its POS machines doubled after the
decision. Further it states that the debit card transactions rose by 108% and credit card
transactions by 60% on 9 November 2016.

Forecast of GDP growth rate
Global analysts cut their forecasts of India's GDP growth rate due to
demonetization. India's GDP in 2016 is estimated to be US$2.25 trillion, hence, each 1 per cent
reduction in growth rate represents a shortfall of US$22.5 billion (Rs. 1.54 lakh crores) for the
Indian economy. According to SocieteGenerale, India's quarterly GDP growth rates would drop
below 7% for an entire year at a stretch for the first time since June 2011.
Drop in industrial output
There was a reduction in industrial output as industries were hit by the cash crisis.
The Purchasing Managers' Index (PMI) fell to 46.7 in November from 54.5 in October, recording
its sharpest reduction in three years. A reading above 50 indicates growth and a reading below
shows contraction. This indicates a slowdown in both, manufacturing and services industries.The
PMI report showed also showed that the reduction in inflation in November was due to shortage
in money supply.
The growth in eight core sectors such as cement, steel and refinery products, which
constitute 38% of the Index of Industrial Production (IIP), was only to 4.9 percent in November
as compared with 6.6 percent in October.
Income tax raids and cash seizures
The Finance Ministry instructed all revenue intelligence agencies to join the crackdown
on forex traders, hawala operators and jewellers besides tracking movement of demonetized
currency notesIt was reported that the Prime Minister's Office (PMO) and the Prime Minister
Modi himself were directly coordinating the raids conducted by the Income Tax, Enforcement
Directorate (ED) and other agencies. As of 23 December, PMO received around 700 calls giving
information about black money and it directly forwarded the information to various law
enforcement agencies for further action.
Income Tax departments raided various illegal tax-evasive businesses in Delhi, Mumbai,
Chandigarh, Ludhiana and other cities that traded with demonetized currency.The Enforcement
Directorate issued several FEMA notices to forex and gold traders. Large sum of cash in defunct
notes were seized in different parts of the country.In Chhattisgarh liquid cash worth of ₹4.4
million (US$65,000) was seized.

As of December 28, official sources said that the Income Tax department detected over
₹4,172 crore of un-disclosed income and seized new notes worth ₹105 crore as part of its
country-wide operations. The department carried out a total of 983 search, survey and enquiry
operations under the provisions of the Income Tax Act and has issued 5,027 notices to various
entities on charges of tax evasion and hawala-like dealings. The department also seized cash and
jewellery worth over ₹549 crore out of which the new currency seized (majority of them ₹2000
notes) is valued at about ₹105 crore. The department also referred a total of 477 cases to other
agencies like the CBI and the Enforcement Directorate (ED) to probe other financial crimes like
money laundering, disproportionate assets and corruption.
Seizures of ₹2000 notes
Huge amounts of cash in the form of new notes were seized all over the country after the
demonetization. As of December 2016, over 4 crore in new banknotes of ₹2000 were seized
from four persons in Bangalore, ₹33 lakh in ₹2000 notes were recovered from Manish Sharma,
an expelled BJP leader in West Bengal,and ₹1.5 crore was seized in Goa.900 notes of the new
₹2000 notes were seized from a BJP leader in Tamil Nadu. Around ₹10 crore in new notes were
seized in Chennai.
As of 10 December, ₹242 crore in new notes had been seized. It was noted in the media
that while people were dying in queues to obtain a few thousand rupees in cash, persons with the
right connections were able to amass crores of rupees in new notes, thus rendering the
demonetization exercise futile.
It was announced by the government that the seized notes will be brought into the
mainstream as soon as possible to ease out the cash problem. Earlier, agencies kept all seized
material, including cash seizures, in their strong rooms as evidence till the case was adjudicated
by the courts. The seized money was then deposited into the Consolidated Fund of India.
Sometimes, income tax cases took years to resolve, still all seized material was kept in safe
lockers of the tax department.
Job losses
There was a loss of jobs due to demonetization, particularly in the unorganised and
informal sector and in small enterprises.

1.2.8 EVASION ATTEMPTS
Gold purchases
In Gujarat, Delhi and many other major cities, sales of gold increased on 9 November,
with an increased 20 to 30% premium surging the price as much as ₹45,000 (US$670) from the
ruling price of ₹31,900 (US$470) per 10 grams (0.35 oz).
Income Tax officials raided multiple branches of Axis Bank and found bank officials
involved in money laundering acts, exchanging old notes for gold.
Donations in temples
In India, the cash deposited into hundis, or cash collection boxes in temples and
gurudwaras are exempted from inquiry by the tax department. This exemption is sometimes
misused to launder money. After the note ban, there was a spike in donations in the form of the
demonetized notes in temples. Authorities of Sri Jalakanteswarar temple at Vellore discovered
cash worth ₹4.4 million (US$65,000) from the temple hundi in the form of defunct notes.
Multiple bank transactions
There have been reports of people circumventing the restrictions imposed on exchange
transactions by conducting multiple transactions at different bank branches and also sending
hired people, employees and followers in groups to exchange large amounts of banned currency
at banks. In response, the government announced that it would start marking customers with
indelible ink. This was in addition to other measures proposed to ensure that the exchange
transactions are carried out only once by each person.
Railway bookings
As soon as the demonetization was announced, it was observed by the Indian

Railways authorities that a large number of people started booking tickets particularly
in classes 1A and 2A for the longest distance possible, to get rid of unaccounted cash. A senior
official said, "On November 13, 42.7 million passengers were nationally booked across all
classes. Of these, only 1,209 were 1A and 16,999 for 2A. It is a sharp dip from the number of
passengers booked on November 9, when 27,237 passengers had booked tickets in 1A and
69,950 in 2A."

The Railways Ministry and the Railway Board responded swiftly and decided that
cancellation and refund of tickets of value ₹10,000 and above will not be allowed by any means
involving cash. The payment can only be through cheque/electronic payment. Tickets above
₹10,000 can be refunded by filing ticket deposit receipt only on surrendering the original ticket.
A copy of the PAN card must be submitted for any cash transaction above ₹50,000. The railway
claimed that since the Railway Board on 10 November imposed a number of restrictions to book
and cancel tickets, the number of people booking 1A and 2A tickets came down.
Municipal and local tax payments
As the use of the demonetized notes had been allowed by the government for the
payment of municipal and local body taxes, it led to people using the demonetized ₹500 and
₹1,000 notes to pay large amounts of outstanding and advance taxes. As a result, revenue
collections of the local civic bodies jumped. The Greater Hyderabad Municipal
Corporation reported collecting about ₹1.6 billion (US$24 million) in cash payments of
outstanding and advance taxes, within 4 days.
The tax collection by local bodies have surged over 260% and more than 15000 crore
mare after 14 days of demonetization. The total indirect tax collection rose to 14.2% only in the
month of December according to Finance Minister Arun Jaitley.
Backdated accounting
The Enforcement Directorate raided several forex establishments making back dated
entries. Money laundering using backdated accounting was carried out by co-operative
banks, jewelers, sellers of iPhones,and several other businesses.
1.2.9 REASONS FOR DEMONETIZATION
The reasoning given by the Indian Prime Minister Narendra Modi was:
1) To tackle black money in the economy.

2) To lower the cash circulation in the country which "is directly related to
corruption in our country," according to PM Modi.

3) To eliminate fake currency and dodgy funds which have been used by
terror groups to fund terrorism in India.
4) The move is estimated to scoop out more than Rs 5 lakh crore black
money from the economy, according to Baba Ramdev, a staunch Modi supporter.
1.2.10 ADVANTAGES OF DEMONETIZATION
1. A major advantage is that demonetization helped the government track black

money. Large sums of black money was kept hidden by tax evaders. Demonetization helped
government uncover huge amount of unaccounted cash. According to estimates made by
RBI, people have deposited more than rupees 3 lakh crores worth of black money in the
bank accounts. This has helped the government in slowing down the plague of parallel
economy.
2. A major reason behind demonetization was that a big part of black money was
being used for funding terrorism, gambling, in inflating the price of major assets classes like
real estate, gold and other social evils. Demonetization is acting as an effective
countermeasure against such activities. Now all such activities will get reduced for some
time and also it will take years for people to generate that amount of black money again and
hence in a way it helps in putting an end this circle of people doing illegal activities to earn
black money and using that black money to do more illegal activities.
3. Another benefit is that due to people disclosing their income by depositing money
in their bank accounts government gets a good amount of tax revenue which can be used by
the government towards the betterment of society by providing good infrastructure,
hospitals, educational institutions, roads and many facilities for poor and needy sections of
society.
1.2.11 DISADVANTAGES OF DEMONETIZATION

1. The biggest disadvantage of demonetization has been the chaos and frenzy it
created among common people initially. Everyone was rushing to get rid of demonetized
notes while inadequate supply of new notes affected the day to day budgets of citizens.
Banks and ATMs witnessed long queues while small businesses suffered temporary
financial losses. The situation was even worse in rural India where people struggled to

exchange and withdraw cash due to lack of enough number of banks and ATMs in their
vicinity.
2. Another disadvantage is that destruction of old currency units and printing of new
currency units involve costs which has to be borne by the government and if the costs are
higher than benefits then there is no use of demonetization.
3. Another problem is that this move was targeted towards black money but many
people who had not kept cash as their black money and rotated or used that money in other
asset classes like real estate, gold and so on were not affected by demonetization.
1.3 DEMONETIZATION IMPACT ON VARIOUS SECTORS
Economy Impact: Demonetization torpedoed India’s economy just when it was getting
into a cruise mode, fired by good monsoon-led rural demand and Seventh Pay Commission-
enabled urban buying. The 8% growth that looked within grasp in FY17 is beyond horizon now.
Only about a quarter of currency cancelled is back in circulation, and that too is being stashed
away for emergency. Lower denomination notes are not available to facilitate transactions. The
fall in demand will further dent already weak investments. The sharpest crash in services PMI
since November 2008 in the aftermath of the global financial crisis underscores the risks. Ambit
sees growth falling to a low of 3.5% in FY17. Others are not so pessimistic, pencilling in about
7%.
Jobs Impact: Hiring experts say jobs at senior levels are not and won’t be impacted. But
overall hiring is down right now, as managers seek to protect revenue/profit targets. No job cut
plans as of now. Variable pay/increment amounts may be impacted. Job numbers are difficult to
estimate, experts say, but sectors where hiring is most hit are retail, consumer goods, real estate,
infrastructure, logistics (for ecommerce especially), auto consumables, and building products.
Hiring by mobile wallet and fintech companies are up, though.
Consumer Spend Impact: Consumption, a big GDP contributor, will take a hit for at
least two quarters, say companies and analysts. Two main problems: Low circulation of lower
denomination notes, which may be temporary, and wealth erosion, that is impacting big ticket
purchases. FMCG sales dropped 20-30% in November. At store levels, impulse buys like snacks,
biscuits were hard hit, as were personal care items, Nielsen data shows. December can be worse

than November, since last month consumer spend in the beginning of the month was unaffected.
Nine million retailers who buy from wholesalers are worst hit, and will feel the pain for a while.
Big, organized retail is doing well. Annual growth rate is around 4.4%. Some big FMCG
companies have cut production. Supply chains are hit as cash fuels many transactions. Full
impact will show up in a month’s time, and can be severe.
Real Estate Impact: Insiders say there’s a 40%-plus drop in enquiries and sales across
key markets of Mumbai, Delhi, Bengaluru and Pune. Deals in secondary market have come to a
standstill. In Bengaluru, drop in deal closings is as much as 60%. Most homebuyers are waiting
for big price reductions. With fear of black money transactions and cash crunch added to an
already slumping real estate sector, near future is bleak.
E-Commerce Impact: Mostly bad, some good. For the online retail market, gross
merchandise value (GMV) of players fell by 40-50% in first few weeks after demonetization, in
the middle of their biggest quarter for sales. Things may remain bleak till March. Even high-
value items like expensive smartphones are selling less. Products returned are up by 50%. And
experts feel consumer sentiment won’t improve quickly. But the boost to digital payments (100%
jump in transactions) has led industry to hope for a bright medium term. Also, grocery and food
delivery set-ups are doing better since they sell essential items. Some saw new customer orders
jump to 25%, from the usual 15-16%.
Tourism Impact: Peak tourism period of November-December badly hit. For tourist
destinations beyond metros, business may be down by as much as 40%. Tourism business in
metros may go down by 10%. Cash shortage at airports and hotels are a big problem. And many
national monuments entry points don’t have card payments facilities. Western countries have
issued advisories on cash crunch in India.
Autos Impact: Post-demonetization, there was some cushion at wholesale level for
Maruti Suzuki, Toyota Kirloskar Motor and Tata Motors from dealer demand for new models or
new variants like Baleno, Brezza, Fortuner, Innova and Tiago. Hyundai India, Honda Cars India
and Mahindra & Mahindra have seen some short-term impact on sales. At the retail level, sales
for cars without waiting period is down 30-50%. Two-wheeler and commercial vehicles have
been hit harder. Sixty to 65% of entry level motorcycle sales happen in rural markets where cash

is king. Two-wheeler sales may have gone down by 5% last month. Tata Motors posted a 17%
decline in commercial vehicle sales in November.
Aviation Impact: In world’s fastest growing aviation market, passenger traffic growth
will fall below 20% from an average 23-24% growth recorded in previous years. Flight bookings
dropped drastically in days after demonetization. Recovered somewhat later. Offline travel
agents, who took cash, badly hit. Flights to small towns, where cash payments are the norm, are
also badly hit, may post negative growth.
Telecom Impact: Mobile phone shipments fell by 26% in November, compared to the
previous month. Smartphone shipments are down by 23%. Inventory pile up with retailers. Big
sellers who do card and online transactions less badly hit. IDC analysts expect sales for feature
phones to drop by 25% in the quarter, and smartphones to fall by 17.5%.
Gold Impact: Scared by government warnings, sale of gold against old currency notes
fell drastically. NRI customers have fled. Sales are down sharply, and it was already a bad year
for gold.
Agriculture Impact: Interestingly, villages have adapted in some ways better than cities.
GoI allowing tax free deposits of any amounts for farmers have led to many of them getting 20%
premium from traders when transacting. Informal credit for daily purchases and use of old notes
for key inputs and selling produce have kept rural economy going. Crop planting increased 20-
35% every week after demonetization and remained higher than last year in all weeks after
November 8. But a lot depends on cash supply improving quickly in the new year.
Metals Impact: Real estate slowdown has hit steel, and may hit further. Aluminum,
copper, zinc also hit since they are raw materials in building industry products. If auto sales are
hit badly, metals business will do worse.
1.4 IMPACT OF DEMONETIZATION ON COMMON MAN
Cash crunch
The 500 and 1,000 rupee notes were the largest denomination of money, which made up
for 14 lakh crores in circulation. Demonetization has a direct impact on sectors dealing with
cash—vendors, auto rickshawwallahs, taxi drivers, daily wage earners and small traders. The

Indian system mainly functions on cash, and so, less cash means disruption in the flow. Even
sectors like real estate, which deal with illegal cash transactions, will go through a rough patch
leading to fall in profits.
Interest rates
When money is deposited in the bank, one earns interest for the same. After the
announcement of note ban, there have been huge cash deposits in banks. In fact, some of the
leading public and private banks have reduced the interest rates on deposits. Depositors might
get lesser interest on their deposits, but the good news is that it will have a long-term positive
effect on the economy as the lending rate (interest rate on loan) will fall. This will boost credit
and investment, to recover the slumping economy.
Inflation
Total cash available, and by this we mean the supply of money, has fallen, which may
lead to deflationary pressures (general price level becomes lower). In effect, it implies less cash
compared to the supply of goods. But as the price levels in India have been high due to high
inflation, fall in money supply can actually help in bringing down inflation. With unaccounted
money being wiped out, we can expect lesser pressure on demand. Fall in inflation will help the
common man, because goods will now become cheaper.
On the other hand, due to the slowing economy, if production falls more than the fall in
the supply of money, then the demand for goods will overshoot the supply of goods, which in
turn will lead to higher inflation. It all depends upon the effect on production and economic
activity in the nation.
The tax effect

Deposits above Rs 2.5 lakh that have not been justified or declared to the income tax
department will be penalized and taxed 200 per cent. This can help bring black money into the
white money fold, making it legal. This can also provide revenues for government, which can be
used to pay the deficit in the budget estimation. If economic activity is slow, then the indirect
taxes (tax on goods and services) will be lesser than estimation. It all comes down to which is
more, collection of penalties and taxes, or the fall in indirect taxes. Demonetization could be the

first step in creating a ripple in the taxation policy before the Goods and Service tax (GST) rolls
out.
Growth
The gross domestic product, which is a parameter to measure growth in the economy,
will take a hit. Research firms have already cut growth estimates by 0.5 per cent. India’s
economy could shrink as there are many sectors run by cash. There are a lot of businesses in the
non-taxpaying sector, which will now be formalized; they will have to give up their market share
to the organized sector. This will cause shrinking of the economy and a fall in the growth.
On the other hand, though there may be a fall in consumption due to shortage of cash,
growth won’t take a hit as high demand and consumption during the recent festival time would
offset the effect of fall in consumption and compensate for the fall.
This process would also forcibly bring in huge amount of money from the informal
sector, which was unaccounted for. This will help in the growth and therefore GDP would not
face a negative impact.
1.5 IMPACT OF CEMONETIZATION ON MIDDLE AND LOWER INCOME GROUP
The study reveals that there was a huge impact of demonetization on middle and lower
income groups. The people had to forego their personal opportunities pertaining to career or
personal life due to the currency shortage during demonetization and not only that but people had
to stand in a queues for hours to withdraw their own money that too not as much as they want.
The promise was made to the people of the nation that they will get 15 lakh in each ones account
after the move and which has not fulfilled.
However, the move was very necessary in order to put a control over many illegal
activities that were happening in the country and the move will ultimately bring benefit in a long
run for the nation.

CHAPTER- 2
REVIEW OF LITERATURE AND RESEARCH DESIGN
2.1 INTRODUCTION TO RESEARCH DESIGN
A research design is the set of methods and procedures used in collecting and analyzing
measures of the variables specified in the research problem research study. The design of a study
defines the study type (descriptive, correlational, semi-experimental, experimental, review, meta-
analytic) and sub-type (e.g., descriptive-longitudinal case study) research problem,
hypotheses, independent and dependent variables, experimental design, and, if applicable, data
collection methods and a statistical analysis plan. Research design is the framework that has been
created to find answers to research questions.
2.2 TITLE OF THE STUDY
A STUDY ON “IMPACT OF DEMONITIZATION ON MIDDLE AND LOWER

INCOME GROUP” AT BANGALORE
2.3 STATEMENT OF THE PROBLEM
Demonetization is a process where government declares the currently running currency

note as illegal to be tender and it has a great significance and immediate impact on the Indian
economy. The main reason for demonetization is to control or eliminate the “black economy”.
Therefore in this research an attempt has been made to find the impact of demonetization on
middle and lower income group people.
Therefore the study addresses the following issues:-
 Elimination of black money from the country.
 Promotion of cash less economy.
 Decision to issue higher currency notes of Rs 2000.
2.4 REVIEW OF LITTERATURE
Ashish Kumar Tripathi

Demonetization is the act of stripping a currency unit of its status as legal tender. When
any Government withdraws the legal tender rights of any denomination of currency, it is known
as demonetization. The Prime Minister announced on 8th of November, 2016 about the
withdrawal of legal tender of ` 500 and ` 1000 currency note in the late evening. The government
claimed that this demonetization is required for the following reasons- 1. For stopping the
funding of terrorism. 2. For facing the problem of fake Currency. 3. For making the black money
worthless. 4. For reducing the corruption, etc. In terms of value, the annual report of Reserve
Bank of India (RBI) of 31 March 2016 stated that total bank notes in circulation valued to 16.42
lakh crore of ` 500 and ` 1000 banknotes. As per the press release of RBI dated on 28/11/2016,
the total amount of old notes (which are now withdrawn) of value of ` 8.11 lakh crore has been
deposited by the customers till 27/11/2016. Banks started accepting deposits from 10th of
November but within a period of 18 days around half money has been received by the banks. The
show is still on. But, between this the Government again provided the scheme of pay tax and
converts your black money into white money scheme launched. Is there any need for it?
Abhinav Singh Chandel
The Government of India has implemented a major economic decision of demonetizing

high value currency notes of Rs. 500 and Rs. 1000. The rationale given behind this is that it
would curb black money and its flow as most of it would get invalidated. This proposition,
however, is not backed by any evidence or proof and therefore portends distinct long-term,
medium-term and short-term complications. This makes it imperative to assess the challenges
such a shock is expected to have on functioning of the Indian economy, which may vary
according to the extent of re-monetisation that would follow-up. This paper tries to explain the
repercussions of such a move on the obtainability of credit, spendings and extent of economic
activities, particularly in India. The research conducted has a descriptive and analytical nature to
it. The paper also seeks to elucidate the implications of demonetization in developing economies
like India.
Sandeep Kaur
Demonetization refers to Withdrawal of a particular form of currency from circulation.

Demonetization is necessary whenever there is a change of national currency. The old unit of

currency must be removed and substituted with a new currency unit. The currency was
demonetized first time in 1946 and second time in 1978. On Nov. 2016 the currency is
demonetized third time by the present Modi government. This is the bold step taken by the govt.
for the betterment of the economy and country. In this paper I want to discuss the impact of
recent demonetization on the Indian system
Rahul Prakash Deodhar

November 14, 2016
The Government of India announced that the Rs 500 and Rs. 1000 denominated currency
notes will cease to be legal tender. The move was targeted towards tackling black money,
corruption and terrorism. After initial euphoria, questions began to emerge. What are the costs of
this demonetization? Will it be effective if people can still create new black money thereafter?
Will it increase the GDP? Will it increase inflation? What about tax revenues? We look for
answers.
Anil I Ramdurg
December 2016
This article has made an attempt to assess how the tool of Demonetization can be used to
eradicate parallel economy. Demonetization is one of the big steps initiated by Government in
addressing the various issues like black money, counterfeit currency, corruption, terrorism etc.
History of demonetization in India and around the world is addressed. Lesson from historically
demonetization guides us how to redefine economy of country by overcoming the earlier causes
for failure. Demonetization obliviously brings many inconveniences to common people but it is
for only short term. However the long term benefits of demonetization overrides the short term
challenges. Government initiatives like Income Declaration Scheme 2016, Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015, Joint Declaration of
AEOI between India and Switzerland to address black money etc. in redefining Indian economy
are to be appreciate and these initiatives leaves their footsteps as part of history.
Dr. Kavita Rao, Dr. Sudhanshu Kumar

14-Nov-2016

The argument posited in favour of demonetisation is that the cash that would be
extinguished would be “black money” and hence, should be rightfully extinguished to set right
the perverse incentive structure in the economy. While the facts are not available to anybody, it
would be foolhardy to argue that this is the only possibility. Therefore, it is imperative to
evaluate the short run and medium-term impacts that such a shock is expected to have on the
economy. Further, the impact of such a move would vary depending on the extent to which the
government decides to remonetise. This paper elucidates the impact of such a move on the
availability of credit, spending, level of activity and government finances.
Vedashree Mali
December 2016
The paper discusses about the move of demonetization taken by Central Government of
India on 8th November, 2016 with respect to its reasons and effects on different sectors in India.
The sectors cover Micro Businesses, E-Wallet businesses, online retail stores and so on. The
paper is based on secondary data collected from different newspapers and online sources,
mentioned in references.
Dr. Partap Singh , Virender Singh

December 2016
India has amongst the highest level of currencies in circulation at 12.1% of GDP. Cash on
hand is an estimated at around 3.2% of household assets, higher than investment in equities, or
roughly around $ 220 billion. Of this cash, 87% is in the form of Rs 500 and Rs 1,000 notes or
roughly Rs 14 lakh crore ($190 billion).A significant portion of the household cash on hand is
generated by economic transactions that are not reported to tax authorities or generated through
corruption. Scrapping the higher denomination money would either result in these being brought
into the system or the money just disappearing. The present paper highlights the probable
consequences of this decision on various economic variables and entities.
2.5 OBJECTIVES OF THE STUDY
 To understand the concept of demonetization.

 To know the impact of demonetization on middle and low income group.
 To analyze the reason for demonetization in the country.
 To know the awareness level of demonetization among the lower income group.
 To know the income generation capacity and their spending after demonetization.
 Analyze the success of government in promoting cashless economy.
 To give favorable suggestion based on study.
2.6 SCOPE OF THE STUDY
Impact of demonetization on the People belongs to middle and lower income group, the
study is limited to the area of Bangalore.
2.7 HYPOTHESIS
1. H0: There does not exist a relationship between demonetization and black money.
H1; There exist a relationship between demonetization and black money.
2. H0: There does not exist a relationship between demonetization and cash less
economy.
H1: There exist a relationship between demonetization and cash less economy.
3. H0: There is no impact of demonetization on middle income group.
H1: There is an impact of demonetization on middle income group.
2.8 RESEARCH METHODOLOGY
The research is descriptive and analytical in nature, descriptive research includes survey,
fact/findings, and enquiries of different kinds.
2.8.1 SAMPLING DESIGN

The population will be different people belongs to middle and lower income group.
2.8.2 SAMPLING PLAN
It is the process of selecting the units from a population of interest so that by studying the
sample we may fairly generalized our result back to the population from which they were
chosen. Hence the sample has been selected from the general public belonging to low and middle
income group.
2.8.3 SAMPLE SIZE
Sample of 50 respondents will be covered based on questionnaire
2.8.4 SAMPLING TECHNIQUE
The selection of employees will be based on a random basis applying simple random
sampling technique.
2.8.5 TOOLS FOR DATA COLLECTION
Primary Data
 The data consisted of Information collected with the help of personnel interaction and
questionnaire with different income group people.
 Observation method was used for understanding the awareness level of impacts of
demonetization.
Secondary Data
Data was collected from already published and available data on internet, research
articles, related journals, different books on monetary system etc.
2.9 PERIOD OF THE STUDY
The study was conducted for the period of 2 months (Feb 2017- April 2017)

2.10 OPERATIONAL DEFINITION
Demonetization
Demonetization is the act of stripping a currency unit of its status as legal tender.
Cashless transactions
Functioning, operated, or performed without using coins or bank notes for money
transactions but instead using credit cards or electronic transfer of funds.
Tax evasion
Ways of illegally paying less tax than you should.
Black money
Money that is earned illegally, or on which the necessary tax is not paid
Counterfeit Currency
Currency made to look like the original of , usually for dishonest or illegal purposes.
Corruption
Illegal, bad, or dishonest behavior, especially by people in positions of power
2.11 PLAN OF ANALYSIS
The information obtained from other sources were processed, tabulated, interpretation
and analyzed in the form Tables, Charts. It is likely analysis of data will be more analytical and
descriptive in nature of the study.
2.12 LIMITATIONS OF THE STUDY
1. Time constraint
2. Financial constraints

3. The findings are based on the information provided by the respondents.
4. Respondents were biased.
5. The sample size is restricted to 50 responded only.
2.13 CHAPTER SCHEME
Chapter 1- Introduction
This chapter gives subject introduction about Demonetization. The introduction of

finance and the effects of demonetization will be explained.
Chapter 2- Review of Literature and Research Design
This chapter include Statement of problems, Review of literature, Need and importance
of the study, Objectives of the study, Hypothesis, Scope of the study, Research methodology,
Source of data, Data collection instrument, Sampling design, Data collection, Plan of analysis
and Limitations of the study.
Chapter 3- Profile of the Respondents
This chapter will include the detail profile of the Respondents
Chapter 4 – Analysis and Interpretation of data
This chapter includes calculation and analysis of data using tabulation method, based on
the results obtained the interpretation has been done accordingly.
Chapter 5- Summary of findings, conclusion and suggestions
This chapter will give a brief summary about the entire study carried out and the findings,
obtained suggestions have been given accordingly.

CHAPTER - 3
RESPONDENTS PROFILE
3.1 INTRODUCTION TO DEMONETIZATION
In 2016, the Indian government decided to demonetize the 500- and 1000- rupee notes,
the two biggest denominations in its currency system; these notes accounted for 86% of the
country’s circulating cash. With little warning, India's Prime Minister Narendra Modi announced
to the citizenry on Nov. 8 that those notes were worthless, effective immediately – and they had
until the end of the year to deposit or exchange them for newly introduced 2000 rupee and 500
rupee bills.
Chaos ensued in the cash-dependent economy (some 78% of all Indian customer
transactions are in cash), as long, snaking lines formed outside ATMs and banks, which had to
shut down for a day. The new rupee notes have different specifications, including size and
thickness, requiring re-calibration of ATMs: only 60% of the country’s 200,000 ATMs were
operational. Even those dispensing bills of lower denominations faced shortages. The
government’s restriction on daily withdrawal amounts added to the misery, though a waiver
on transaction fees did help a bit.
Small businesses and households struggled to find cash and reports of daily wage
workers not receiving their dues surfaced. The rupee fell sharply against the dollar (see chart).
The government’s goal (and rationale for the abrupt announcement) was to combat
India's thriving underground economy on several fronts: eradicate counterfeit currency, fight tax
evasion (only 1% of the population pays taxes), eliminate black money gotten from money
laundering and terrorist-financing activities, and to promote a cashless economy. Individuals and
entities with huge sums of black money gotten from parallel cash systems were forced to take
their large-denomination notes to a bank, which was by law required to acquire tax information
on them. If the owner could not provide proof of making any tax payments on the cash, a penalty
of 200% of the owed amount was imposed.

3.2 PROFILE OF INDIAN CURRENCY
The word "rūpiye" is derived from a Sanskrit word "rūpaa", which means "wrought
silver, a coin of silver", in origin an adjective meaning "shapely", with a more specific meaning
of "stamped, impressed", whence "coin". It is derived from the noun rūpa "shape, likeness,
image". The word rūpa is being further identified as having sprung from the Dravidian.
The Indian rupee was a silver-based currency during much of the 19th century, which had
severe consequences on the standard value of the currency, as stronger economies were on
the gold standard. During British rule, and the first decade of independence, the rupee was
subdivided into 16 annas. Each anna was subdivided into either 4 paisas or 12 pies. So one rupee
was equal to 16 annas, 64 paises of 192 pies. In 1957, decimalization occurred and the rupee was
divided into 100 naye paise (Hindi/Urdu for new paisas). After a few years, the initial "naye"
was dropped.
For many years in the early and mid-20th century, the Indian rupee was the official
currency in several areas that were controlled by the British and governed from India; areas such
as East Africa, Southern Arabia and the Persian Gulf.
The currency used by the India is known as the Indian Rupee, which is also written out in
full as the India Rupee and popular exchange rate is USD to INR. The currency symbol for the
Indian Rupee is ₹, while the currency code is INR.
Udaya Kumar Dharmalingam born 10 October 1978 in Kallakurichi, Tamil Nadu is the
designer of the Indian rupee sign. His design was selected from among five short listed symbols.

According to Udaya Kumar the design is based on the Indian tricolor. He is an assistant
professor at IIT Guwahati.
3.3 PROFILE OF THE RESPONDENTS
3.3.1 Table showing the Gender wise classification of the respondents

Table 3.3.1
Gender classification
RESPONDENT (n=50)
PARTICULARS SCALE
RESPONSES PERCENTAGE
Male 28 56
Gender Classification Female 22 44
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 56% of the respondents are male and rest 44% are
females.

3.3.1 Graph showing the Gender wise classification of the respondent.
Graph 3.3.1
Gender classification
100 100
90
80
70
60 56
50 50
44 RESPONSES
40 PERCENTAGE
28
30
22
20
10
0
MALE
FEMALE
TOTAL
INTERPRETATION
From the above graph it can be interpreted that majority of respondents are male. Hence this
classification is to know who are more affected from the demonetization among middle and
lower income group people.

3.3.2 Table showing the Age classification of the respondents
Table 3.3.2
Age classification
RESPONDENT (n=50)
PARTICULARS SCALE
Less than 25 years 15 30
Between 25 -45 18 36
Age classification
Above 45 years 17 34
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 30% of the respondents belong to the age less than
25 years, 36% of the respondents belong to the age between 25-45 years, and 34% of the
respondents belong to the above 45 years.

3.3.2 Graph showing the Age classification of the respondents
Graph 3.3.2
Age classification
100
100
80
RESPONSES
Axis Title
60 PERCENTAGE
30 36 50
34
40
15
18
20
17
0 PERCENTAGE
>25 RESPONSES
25 -45
<45
TOTAL
INTERPRETATION
From the above graph it can be interpreted that the people above the age of 25 are affected the
most by the demonetization as they are earners and are regularly deals with money.

3.3.3 Table showing the qualification wise classification of the respondents.
Table 3.3.3
Qualification wise classification
RESPONDENT (n=50)
PARTICULARS SCALE
Graduate 10 20
Under graduate 5 10
Qualification wise
classification Post graduate 19 38
Any other 16 32
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 20% of respondents are graduate, 10% of
respondents are under graduate, 38% of respondents are post graduate and rest 32% of
respondents are qualified with other courses.

3.3.3 Graph showing the qualification wise classification of the respondents.
Graph 3.3.3
Qualification wise classification
10
Graduate
Under graduate
50 19
Post graduate
Any other
TOTAL
16
INTERPRETATION
From the above graph it can be interpreted that respondents are from different educational
background and majority of them are post graduates.

3.3.4 Table showing the classification of respondents based on marital status.
Table 3.3.4
Classification based on marital status
RESPONDENT (n=50)
PARTICULARS SCALE
Married 36 72
Classification based on
Unmarried 14 28
marital status
TOTAL 50 100
(Source: Primary)
Analysis
From the above table it is analyzed that 72% of respondents are married and rest 28% of
respondents are unmarried.

3.3.4 Graph showing the classification of respondents based on marital status.
Graph 3.3.4
Classification based on marital status
100
TOTAL
50
28
Unmarried PERCENTAGE
14 RESPONSES
72
Married
36
0 20 40 60 80 100 120
Interpretation
From the above graph it can be interpreted that the majority of respondents are married and are
affected. Since they have more responsibility and they regularly take decision and deals with
money. Demonetization has affected them most when compared to unmarried.

3.3.5 Table showing the classification of respondents based on Work experience.
Table 3.3.5
Classification based on work experience
RESPONDENT (n=50)
PARTICULARS SCALE
0-5 years 20 40
5-10 years 13 26
Classification based on work

10-15 years 1 2
experience
Above 15 years 16 32
TOTAL 50 100
(Source: Primary)
Analysis
From the above table it can be analyzed that 40% of respondents are with 0-5 experience, 26% of
respondents are with 5-10 years of experience, 2% of respondents are with 10-15 years of
experience and rest 32% of respondents are with work experience above 15 years.

3.3.5 Graph showing the classification of respondents based on work experience.
Graph 3.3.5
Classification based on work experience
40
20
0-5 years
5-10 years
100 50 10-15 years
13 26
Above 15 years
TOTAL
1
2
16
32
Interpretation
From the above graph it can be interpreted that the data is collected from the people with the
different work experiences and it can be found that 0-5 years of work experience are more
effected.

3.3.6 Table showing the classification of respondents based on income per year.
Table 3.3.6
Classification based on income per year
RESPONDENT (n=50)
PARTICULARS SCALE
1 lakh - 2 lakh 30 60
2 lakh - 3 lakh 6 12
Classification based on
3 lakh - 4 lakh 7 14
income per year
Above 4 lakh 7 14
TOTAL 50 100
(Source: Primary)
Analysis
From the Above table it is identified that 60% of respondents are with the income between 1 lakh
- 2 lakh per year, 12% of respondents are with income 2 lakh – 3 lakh per year, 14% of
respondents are with income 3 lakh – 4 lakh per year and rest 14% of respondents are with the
income level of above 4 lakh per year.

3.3.6 Graph showing the classification of respondents based on income per year.
Graph 3.3.6
Classification based on income per year
100 100
90
80
70
60
60
50
50
RESPONSES
40
30 PERCENTAGE
30
20
12 14
10 6 14
7
7
0
1 lakh - 2
2 lakh - 3
lakh 3 lakh - 4
lakh Above 4 lakh
lakh TOTAL
Interpretation
From the above table it is analyzed that data is collected from the different people with different
income generation group and it can found that people with income 1 lakh – 2 lakh per year are
more.

CHAPTER - 4
DATA ANALYSIS AND INTERPRETATION
4.1 Table showing the Awareness level of demonetization.
Table 4.1
Awareness level of demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 49 98
Awareness level of
No 1 2
demonetization
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified as 98% of respondents are aware of the demonetization
whereas only 2% respondents are unaware of demonetization.

4.1 Graph showing the Awareness level of demonetization.
Graph 4.1
Awareness level of demonetization
100 100
98
90
80
70
60
50 49 50
40
RESPONSES
30
PERCENTAGE
20
10
0 1 2
Interpretation
From the above table it can be interpreted that maximum people are aware about the
demonetization. Since demonetization is a withdrawal of present currency as legal tender and
every individual holds currency, hence maximum number of people are aware of demonetization
because all people have faced some or the other problem.

4.2 Table showing the impact level of demonetization.
Table 4.2
Impact level of demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
RESPONSES PERCENTTAGE
Completely 11 22
Partially 37 74
Impact Level of
demonetization
Not at all 2 4
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that the demonetization has impacted completely for
22% of respondents, partially for 74% of respondents and 4% had no impact of demonetization.

4.2 Graph showing the impact level of demonetization.
Graph 4.2
Impact level of demonetization
160
100
140
120
74
100
80 PERCENTTAGE
RESPONSES
60
50
40
37
22
20
11
4
0 2
completely partially Not at all TOTAL
Interpretation
From the above graph it can be interpreted that demonetization has effected the maximum
number of individuals in a country because there were lack of supply of new currency after the
existing one was made no longer a legal tender and people were facing difficulties for their day
to day petty cash transactions.

4.3 Table showing the benefits or damage caused by demonetization.
Table 4.3
Benefits or damage caused by demonetization
SCALE RESPONDENT (n=50)
PARTICULARS
I am benefited 16 32
Benefits and damages caused It cause damage to

34 68
by demonetization me
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 32% of the respondent are benefited with the
demonetization and it caused damage to 68% of the respondents.

4.3 Graph showing the benefits or damage caused by demonetization.
Graph 4.3
Benefits or damage caused by demonetization
100
TOTAL
50
68
PERCENTAGE
it cause damage to me
34 RESPONSES
32
I am benifited
16
0 20 40 60 80 100
Interpretation
From the above graph it can be interpreted that the demonetization caused damage to majority of
the people in a country because of higher demand, inefficient supply of new currency and
withdrawal limits per day/week.

4.4 Table showing the existence of black money in India.
Table 4.4
Existence of black money in India
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 47 94
Existence of black money in

No 3 6
India
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified that 94% of respondents agree that black money still
exist in India whereas only 6% of respondents says black money do not exist in India.

4.4 Graph showing the existence of black money in India.
Graph 4.4
Existence of black money in India
100
94
100
90
80
70 50
47 RESPONSES
60
PERCENTAGE
50
40 6
30
20 3 PERCENTAGE
10
RESPONSES
0
Yes No TOTAL
Interpretation
From the above graph it can be interpreted that the majority of respondents favored existence of
black money in India, hence the demonetization aims towards fighting against black money and
it was successful in removing black money to some extent but not completely.

4.5 Table showing the impact of demonetization on curbing black money, corruption and
terrorism.
Table 4.5
Impact of demonetization on curbing black money, corruption and terrorism
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 4 8
Yes, but need better

Impact of demonetization 35 70
planning
on curbing black money,
corruption and terrorism. No 11 22
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 8% of respondents says demonetization has helped
in curbing black money, corruption and terrorism and 22% says no to it whereas the rest 70 % of
respondents says yes but believes that it needed better planning.

4.5 Graph showing the impact of demonetization on curbing black money, corruption and
terrorism.
Graph 4.5
Impact of demonetization on curbing black money, corruption and terrorism
35 Yes
Yes, but need better planning
50
No
TOTAL
11
Interpretation
From the above graph it can be interpreted that maximum respondents believes that
demonetization will help in removing black money, corruption and terrorism from the country
but it needed much better planning for the complete success of demonetization without causing
the much of inconvenience to individuals.

4.6 Table showing the inconvenience caused by demonetization.
Table 4.6
Inconvenience caused by demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 34 68
Yes, but I don’t

11 22
Inconvenience caused by mind
demonetization
No 5 10
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be seen that for 68% of respondents demonetization caused
inconvenience, 22% of the respondents don’t mind the inconvenience caused to them and
demonetization has not caused any inconvenience to remaining 10% of respondents.

4.6 Graph showing the inconvenience caused by demonetization.
Graph 4.6
Inconvenience caused by demonetization
160
140
120
100 100
80 PERCENTTAGE
68 RESPONSES
60
40
22 50
20
34
10
11 5
0
Yes Yes, but I don’t mind No TOTAL
Interpretation
From the above graph it can be interpreted that the demonetization caused inconvenience to
majority of the people in a country but it was a move for the goodness of the entire nation and
hence some individuals don’t mind the inconvenience caused to them from the demonetization
because they are in favor of the move.

4.7 Table showing the standing time in the queues to withdraw/exchange money.
Table 4.7
Standing time in the queues to withdraw/exchange money
RESPONDENT (n=50)
PARTICULARS SCALE
0-1 Hours 16 32
1-3 Hours 20 40
standing time in the queues
to withdraw/exchange 3-8 Hours 12 24
money
Over 8 Hours 2 4
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 32% of respondents had to stand in a queues for 0-1
hour, 40% of respondents for 1-3 hours, 24% of respondents are for 3-8 hours and rest 4%
respondents for over 8 hours to withdraw/ exchange some part of money.

4.7 Graph showing the standing time in the queues to withdraw/exchange money.
Graph 4.7
Standing time in the queues to withdraw/exchange money
100
100
90
80
70
60
50
RESPONSES
50
40 PERCENTTAGE
40
32
30 24
20
20 16
12
10 4
2
0
0-1 Hours 1-3 Hours 3-8 Hours Over 8 Hours TOTAL
Interpretation
From the above graph it can be interpreted that all the individuals had to stand in a queues to
withdraw/deposit their money. Maximum no. of individuals were forced to stand hours together
to deposit/withdraw a small amount of their own money which was not up to their requirements.
The common men who have no connection with black money (or) indulge in any fraudulent
activity have suffered a lot in queue.

4.8 Table showing forego of potential opportunity pertaining to career/personal life because
of demonetization.
Table 4.8
Forego of potential opportunity pertaining to career/personal life because of
demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 29 58
Forego of potential
opportunity pertaining to
No 21 42
career/personal life because
of demonetization
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 58% of respondents have to forego their potential
opportunity pertaining to career/personal life due to currency shortage and remaining 42% have
not.

4.8 Graph showing forego of potential opportunity pertaining to career/personal life

because of demonetization.
Graph 4.8
Forego of potential opportunity pertaining to career/personal life because of
demonetization
160
140
120
100 100
80 PERCENTAGE
RESPONSES
60 58
40 42
50
20
29
21
0
Yes No TOTAL
Interpretation
From the above graph it can be interpreted that more number of individuals has to forego their
opportunities pertaining to carrier/personal life due to the currency shortage throughout the
country and hence they couldn’t able to meet the cash requirements and get benefited by the
opportunities.

4.9 Table showing whether demonetization should have been implemented in a phased
manner.
Table 4.9
Whether demonetization should have been implemented in a phased manner
RESPONCENT (n=50)
PARTICULARS SCALE
Strongly agree 15 30
Strongly disagree 2 4
Whether demonetization should
have been implemented in a Agree 28 56
phased manner
Disagree 5 10
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified that 30% of respondents strongly agrees that
demonetization have been implemented in a phase manner, 4% respondents strongly disagrees,
56% respondents agree and remaining 10% respondents disagrees to the statement.

4.9 Graph showing whether demonetization should have been implemented in a phased
manner.
Graph 4.9
Whether demonetization should have been implemented in a phased manner
120
100 100
80
60 RESPONSES
56
50 PERCENTTAGE
40
30 28
20
15
4 10
5
0 2
Strongly agree Strongly Agree disagree TOTAL
disagree
Interpretation
From the above graph it can be analyzed that the demonetization had to be implemented in a
phased manner but implementing demonetization in a phased manner would have not served its
purpose and hence it has to be surprised move.

4.10 Table showing disruption of regular routine because of demonetization.
Table 4.10
Disruption of regular routine because of demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 34 68
Disruption of regular routine

No 16 32
because of demonetization
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that the regular routine of 68% of respondents is
disrupted due to demonetization and remaining 32% had no impact of demonetization on their
regular routine.

4.10 Graph showing disruption of regular routine because of demonetization.
Graph 4.10
Disruption of regular routine because of demonetization
68
34
Yes
100 50 No
TOTAL
16
32
Interpretation
From the above graph it can be interpreted that the demonetization has disrupted the regular
routine of maximum individuals. Since they have to stand in queues for a long time to withdraw
or deposit small part of their money, to meet the cash requirements of their day to day
expenditures.

4.11 Table showing the impact of demonetization on various sections of society.
Table 4.11
Impact of demonetization on various sections of society
RESPONDENT (n=50)
PARTICULARS SCALE
The rich 11 22
The middle class 25 50

impact of demonetization on
various sections of society
The poor 14 28
TOTAL 50 100
(Source: Primary)
ANALYSIS
From above table it is identified that the 22% of respondents says the rich people affected the
most by the demonetization, 50% of respondents says the middle class and remaining 28% says
it’s the poor people who has been affected the most because of demonetization.

4.11 Graph showing the impact of demonetization on various sections of society.
Graph 4.11
Impact of demonetization on various sections of society
100 100
90
80
70
60
Axis Title
50
50
50
40 RESPONSES
30 PERCENTTAGE
22 25 28
20
11
14
10
0
The rich
The middle
class The poor
TOTAL
Axis Title
Interpretation
From the above graph it can be interpreted that the middle class people are effected most by the
demonetization. The rich people exchanged their money with the help of their influence with
bank managers and other authoritative persons and the poor people didn’t have much money in
their hands to exchange. It is a middle class who suffered a lot with the demonetization decisions
in order to exchange/withdraw money.

4.12 Table showing the correctness of decision to issue Rs 2000 notes.
Table 4.12
Correctness of decision to issue Rs 2000 notes
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 19 38
Correctness of decision to
No 31 62
issue Rs 2000 notes
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that the 62% of the respondents are against the decision
to issue the new Rs 2000 notes and only 38% are respondents are in favor of issuing Rs 2000
notes.

4.12 Graph showing the correctness of decision to issue Rs 2000 notes.
Graph 4.12
Correctness of decision to issue Rs 2000 notes
100
TOTAL
50
62
PERCENTAGE
No
31 RESPONSES
38
Yes
19
0 20 40 60 80 100
Interpretation
From the above graph it can be interpreted that the majority of respondents says the decision to
issue 2000 notes was a bad decision. Since higher currency notes are thought to be friendly to
corruption and make it easy to hold black money. But government had to issue 2000 notes in
order to meet the access demand of cash after demonetization in the country. And initially in
short time public faced lot of difficulties to use 2000 notes in market as there was no much cash
available to provide change for 2000 notes after a small purchase.

4.13 Table showing chances of the entry of fake Rs 2000 notes into the market.
Table 4.13
Chances of the entry of fake Rs 2000 notes into the market
RESPONCENT (n=50)
PARTICULARS SCALE
Yes 22 44
No 5 10
Chances of the entry of fake

Rs 2000 notes into the May be 17 34
market
Not sure 6 12
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 44% of respondents says yes, there could be an
entry of fake Rs 2000 notes into market, 10% respondents says no, 34% says may be and rest
12% of respondents are not sure about it.

4.13 Graph showing chances of the entry of fake Rs 2000 notes into the market.
Graph 4.13
Chances of the entry of fake Rs 2000 notes into the market
RESPONSES
17 6
Yes
5 No
56 May be
50
Not sure
TOTAL
22
Interpretation
From the above graph it can be interpreted that majority of people agrees that the issue of Rs
2000 notes was bad move since there could be an entry of fake Rs 2000 notes into the market as
the new 2000 notes doesn’t possess any additional security features and it becomes easy to float
the duplicate notes into the market.

4.14 Table showing the primary motive of demonetization.
Table 4.14
Primary motive of demonetization
RESPONCENT (n=50)
PARTICULARS SCALE
Financial 2 4
It was a strike against

24 48
Primary motive of corruption
demonetization Political 22 44
Other 2 4
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 4% of respondents believes that the primary motive
of demonetization was finance, 48% believes that it was a strike against corruption, 44% believes
it was a political move and remaining 4% believes there was other motive behind
demonetization.

4.14 Graph showing the primary motive of demonetization.
Graph 4.14
Primary motive of demonetization
100
80
60 100
40
48
4 44 RESPONSES
20 50
2 24 PERCENTTAGE
22 4
0 PERCENTTAGE
Financial 2
It was a RESPONSES
Political
strike Other
against TOTAL
corruption
Interpretation
From the above graph it can be interpreted that the majority of respondents says demonetization
was a strike against corruption. Corruption is one of the biggest problem in the growth of the
country and demonetization is proved to be the best decision by the government in order to
eliminate corruption from the country.

4.15 Table showing the whether demonetization is a political move.
Table 4.15
Whether demonetization is a political move
RESPONDENT (n=50)
PARTICULARS SCALE
Completely 18 36
Partially 28 56
Whether demonetization is a
political move
Disagree 4 8
TOTAL 50 100
(Source: Primary)
ANALYSIS
From above table it can be analyzed that 56% respondents partially agrees that demonetization
was a political move just to effect other political parties in funding of UP elections, 36%
respondents says it was completely political move and remaining 8% disagree to the statement.

4.15 Graph showing the whether demonetization is a political move.
Graph 4.15
Whether demonetization is a political move
120
100 100
80
60 RESPONSES
56
PERCENTTAGE
50
40
36
28
20 18
8
4
0
Completely Partially Disagree TOTAL
Interpretation
From the above graph it can be interpreted that maximum number of respondents says the
government’s intension behind demonetization was not just to fight against black money,
corruption and terrorism but it was also a political move by a BJP government just to effect other
political parties in funding of UP elections.

4.16 Table showing the ban of Rs 500 and Rs 1000 note will bring an end to.
Table 4.16
Ban of Rs 500 and Rs 1000 note will bring an end to
RESPONCENT (n=50)
PARTICULARS SCALE
Black Money 10 20
Corruption 9 18
Ban of Rs 500 and Rs 1000 Terrorism 5 10
note will bring an end to
Counterfeiting of
2 4
currency
None of the above 24 48
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that the 48% of respondents say demonetization will not
bring an end to black money, corruption, terrorism and counterfeiting of currency.20% of
respondents says it will bring an end to black money, 18% says it will end corruption, 10% says
it will end terrorism and 4% says it will end counterfeiting of currency.

4.16 Graph showing the ban of Rs 500 and Rs 1000 note will bring an end to.
Graph 4.16
Ban of Rs 500 and Rs 1000 note will bring an end to
TOTAL 50 100
None of the above 24 48
Counterfeiting of currency 24
RESPONSES
PERCENTTAGE
Terrorism 5 10
Corruption 9 18
Black Money 10 20
0 20 40 60 80 100 120 140 160
Interpretation
From the above graph it can be interpreted that the maximum number of respondent are
expecting demonetization will put an end to black money , corruption and terrorism and
counterfeiting of currency. But demonetization didn’t control all the illegal activities of financial
matters completely but it was successful to some extent.

4.17 Table showing government’s success in eliminating black money.
Table 4.17
Government’s success in eliminating black money
RESPONCENT (n=50)
PARTICULARS SCALE
Strongly disagree 9 18
Strongly agree 3 6
Government’s success in Neutral 13 26

eliminating black money Disagree 17 34
Agree 8 16
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified as 34% disagree that government was successful in
eliminating black money from the country. 18% of respondents strongly disagree, 6% of
respondents strongly agree, 26% are respondents neutral and rest 16% agree to the statement.

4.17 Graph showing government’s success in eliminating black money.
Graph 4.17
Government’s success in eliminating black money
100
100
90
80
70
60
50
50
40 34 RESPONSES
18 26
30 PERCENTTAGE
20 9 6 16
13 17
10 3
8
0
PERCENTTAGE
Strongly Strongly
RESPONSES
disagree agree Neutral Disagree
Agree
TOTAL
Interpretation
From the above graph it can be interpreted that maximum people doesn’t agree that the
government was successful in eliminating black money from the country with the help of
demonetization. Because of prior leakage of information among the prioritized sector some of
the black money holders were not affected with the move.

4.18 Table showing the regularity in re-stock of ATM/Bank with cash.
Table 4.18
Regularity in re-stock of ATM/Bank with cash
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 12 24
No 24 48
Regularity of re-stock of
ATM/Bank with cash
Don’t Know 14 28
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 48% respondents says the ATM/Banks are not
regularly re-stock with cash, 24% says it was regularly re-stocked and rest 28% are not sure
about that.

4.18 Graph showing the regularity in re-stock of ATM/Bank with cash.
Graph 4.18
Regularity in re-stock of ATM/Bank with cash
12
50 24
Yes
No
Don’t Know
TOTAL
14
Interpretation
From the above graph it can be interpreted that ATM/banks in the country were not regularly re-
stocked with cash because of the high demand of cash throughout the country and lack of stock
of new currency notes with the government to supply it to the bank to meet the cash needs of the
people.

4.19 Table showing difficulty in using new Rs 2000 notes in the market.
Table 4.19
Difficulty in using new Rs 2000 notes in the market
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 46 92
Difficulty in using new Rs

No 4 8
2000 notes in the market
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 92% of respondents says that they faced difficulty in
using new Rs 2000 notes in the market and remaining 8% of respondents says no to it.

4.19 Graph showing difficulty in using new Rs 2000 notes in the market.
Graph 4.19
Difficulty in using new Rs 2000 notes in the market
100
TOTAL
50
8
No PERCENTAGE
4 RESPONSES
92
Yes
46
0 20 40 60 80 100 120
Interpretation
From the above graph it can be interpreted that most of the respondent faced difficulties during
demonetization to use the higher currency notes of 2000 notes in the market. Rs 1000 and Rs
500 notes were banned so their was no sufficient currency in the market to provide the change
for Rs 2000 after some small purchases. Hence most of the respondents faced difficulties to use
Rs 2000 notes in the market.

4.20 Table showing time sufficiency to exchange Rs 500 and Rs 1000 notes.
Table 4.20
Time sufficiency to exchange Rs 500 and Rs 1000 notes
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 23 46
Awareness Level No 27 54
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 54% of respondents says the time given to exchange
the old Rs 500 and Rs 1000 note was not sufficient and rest 46% says it was sufficient.

4.20 Graph showing time sufficiency to exchange Rs 500 and Rs 1000 notes.
Graph 4.20
Time sufficiency to exchange Rs 500 and Rs 1000 notes
160
140
120
100 100
80 PERCENTAGE
RESPONSES
60
54
46
40
20 50
23 27
0
Yes No TOTAL
Interpretation
From the above graph it can be interpreted that the maximum number of people disagree that the
time given to exchange Rs 500 and Rs 1000 notes were sufficient. Since the move effected every
individual throughout the country and it is very difficult for the country with population of more
than 1.25crore to exchange their old currency within 52 days.

4.21 Table showing improvement in quality of life of common man after demonetization.
Table 4.21
Improvement in quality of life of common man after demonetization
RESPONCENT (n=50)
PARTICULARS SCALE
Completely agree 2 4
Partially agree 10 20
Improvement in quality of life of
common man after Can’t say 23 46
demonetization
Disagree 15 30
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above graph it can be analyzed that 46% of respondents can’t say whether
demonetization will improvement in quality of life of common man. 4% respondents completely
agree that it will improve the quality of life, 20% partially agree and rest 30% respondents
disagree to it.

4.21 Graph showing improvement in quality of life of common man after demonetization.
Graph 4.21
Improvement in quality of life of common man after demonetization
100 100
90
80
70
60
50 46
40 50
30 20 30
RESPONSES
20 4 23
10 10 PERCENTTAGE%
2 15
0 PERCENTTAGE%
RESPONSES
Interpretation
From the above graph it can be interpreted that the maximum number of respondents are not sure
whether the demonetization will improve the quality of life of a common man. Since people were
not aware how far the move is going to be successful and help the common man to improve the
quality of their life.

4.22 Table showing the experience of public regarding demonetization.
Table 4.22
Experience of public regarding demonetization
RESPONCENT (n=50)
PARTICULARS SCALE
Bad experience 18 36
Could improve 15 30
Peoples experience with

Good experience 7 14
demonetization
Can’t say 10 20
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified that 36% of respondents says currency ban was a bad
experience, 30% says it could have been improved, 14% says it was a good experience and rest
20% respondent as can’t say.

4.22 Graph showing the experience of public regarding demonetization.
Graph 4.22
Experience of public regarding demonetization
100
100
90
80
70
60 36
50 30 50
40
30 18 14 20
15 RESPONSES
20
10 7 10 PERCENTTAGE
0 PERCENTTAGE
RESPONSES
Interpretation
From the above graph it can be interpreted that the currency ban by the Modi government was a
bad experience for the people in a country and most of them thinks there could be an
improvement in implementing a decision with a better planning.

4.23 Table showing the loss of employment due to demonetization.
Table 4.23
Loss of employment due to demonetization
RESPONDENT
PARTICULARS SCALE
Yes 17 34
No 13 26
Loss of employment due to
demonetization
Not sure 20 40
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 40% of the respondent are not sure whether
demonetization leads to the loss of employment, 34% says it leads to loss of employment and
remaining 26% says no to it.

4.23 Graph showing the loss of employment due to demonetization.
Graph 4.23
Loss of employment due to demonetization
RESPONSES
20
13
Yes
No
70
Not sure
50
TOTAL
17
Interpretation
From the above graph it can be interpreted that most of the respondents are not sure whether the
demonetization leads to the loss of employment or not. Since everyone didn’t lose their jobs but
some of the wage earners had to face the problems because of lack of cash supply available in
the country to provide for the wage.

4.24 Table showing the awareness level of cash less transaction before demonetization.
Table 4.24
Awareness level of cash less transaction before demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 33 66
Awareness level of cash less

transaction before No 17 34
demonetization.
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified that 66% of respondents are a aware of cash less
transaction before demonetization and rest 34% are unaware of cash less transaction before
demonetization.

4.24 Graph showing the awareness level of cash less transaction before demonetization.
Graph 4.24
Awareness level of cash less transaction before demonetization
160
100
140
120
100 66
80 PERCENTAGE
RESPONSES
60
34 50
40
33
20
17
0
Yes No TOTAL
Interpretation
From the above graph it can be interpreted that most of the respondents were aware of the
cashless transactions before the demonetization as the government of India is continuously
promoting for the digital transactions even before the move.

4.25 Table showing increases in awareness level of cash less transaction after
demonetization.
Table 4.25
Increases in awareness level of cash less transaction after demonetization
RESPONDENT (n=50)
PARTICULARS SCALE
Agree 44 88
Increases in awareness level

Strongly agree 6 12
of cash less transaction after
demonetization
Disagree 0 0
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 88% respondents agrees that demonetization leads
to the increase in the awareness level of cash less transaction after demonetization, 12% of
respondents strongly agrees to it and none of the respondents disagree to it.

4.25 Graph showing increases in awareness level of cash less transaction after
demonetization.
Graph 4.25
Increases in awareness level of cash less transaction after demonetization
TOTAL
Disagree
PERCENTTAGE
RESPONSES
Strongly agree
Agree
0 20 40 60 80 100
Interpretation
From the above graph it can be interpreted that every respondents agrees that demonetization
leads to increase in awareness level of cashless transactions. Since there was lack of cash supply
in the economy after the move and it was very difficult to exchange/withdraw cash in the banks
hence most of the people got attracted towards the cashless transactions and feel secure.

4.26 Table showing success of government in promoting cash less economy.
Table 4.26
Success of government in promoting cash less economy
RESPONCENT (n=50)
PARTICULARS SCALE
Yes, to some extent 28 56
No, not at all 10 20
success of government in Completely

2 4
promoting cash less economy successful
Not sure 10 20
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be identified that 56% of respondents says yes, to some extent
government was successful in promoting cash less economy, 20% respondents says the
government was not at all successful, 4% says completely successful and remaining 20% are not
sure.

4.26 Graph showing success of government in promoting cash less economy.
Graph 4.26
Success of government in promoting cash less economy
160
140
120
100
80 100
60 56 PERCENTTAGE
RESPONSES
40
20 28 20
10 20 50
0 4
2 10
Yes, to some
extent No, not at all
Completely
successful Not sure
TOTAL
Interpretation
From the above graph it can be interpreted that maximum people agrees that government was
successful in promoting cashless economy with the demonetization move. Since the government
was promoting the cashless economy even before the demonetization, but after the move when
there was lack of cash available, the people moved towards the cashless transactions and the
government has also launched the new BHIM app to promote cashless transaction, but still 100%
of the population is not using this facilities because of lack of knowledge to use. Government
should educate about the importance and convenience of the cashless economy.

4.27 Table showing the effect of demonetization on income generation level.
Table 4.27
Effect of demonetization on income generation level
RESPONDENT (n=50)
PARTICULARS SCALE
Completely 5 10
Partially 31 62
Effect of demonetization on
income generation level
Not at all 14 28
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 62% of respondents partially agree that
demonetization has impacted the income generation level, 10% of respondents completely agrees
and rest 28% respondents disagrees to it.

4.27 Graph showing the effect of demonetization on income generation level.
Graph 4.27
Effect of demonetization on income generation level
100
90
80
70
60
50 RESPONSES
40 PERCENTTAGE
30
20
10
0 PERCENTTAGE
Completely RESPONSES
Partially
Not at all
TOTAL
Interpretation
From the above graph it can be interpreted that the demonetization has partially effected the
income generation level of an individuals in the country. Since the cash was not available as
much as required, the expenditures of an individual reduced. As ones expenditures become the
income for other, there was reduction in the income generation level of an individual.

4.28 Table showing impact of demonetization on spending’s of an individual.
Table 4.28
Impact of demonetization on spending’s of an individual
RESPONDENT (n=50)
PARTICULARS SCALE
Yes 41 82
No 4 8
Impact of demonetization on
spending’s of an individual
Not sure 5 10
TOTAL 50 100
(Source: Primary)
ANALYSIS
From the above table it can be analyzed that 82% of respondents say demonetization has
impacted on the spending’s of an individual, 8% of respondents say no to it and remaining 10%
of respondents are not sure.

4.28 Graph showing impact of demonetization on spending’s of an individual.
Graph 4.28
Impact of demonetization on spending’s of an individual
82 Yes
41
No
100 50
Not sure
TOTAL
5 4
8
10
Interpretation
From the above graph it can be interpreted that demonetization have impacted the spending of an
individuals. Since the sufficient cash was not available after the demonetization. All the
individuals reduced their extra expenditures in order to meet the necessity with the available cash
on time.

HYPOTHESIS TESTING
H0:- There doesn’t exist a relationship between demonetization and black money
Observed data table
PARTICULARS SCALE YES NO TOTAL
There doesn’t
exist a relationship Male 1 16 17
between
demonetization
and black money Female 2 31 33
Total 3 47 50
SCALE O.F E.F O-E (O-E)2 (O-E)2

E
Male
Yes 1 1.02 0.02 0.0004 0.000392
No 16 15.98 0.02 0.0004 0.0000250
Female
2
Yes 1.98 0.02 0.0004 0.000202
31
No 31.02 0.02 0.0004 0.0000129
Total 50 0.0006319
Where:
 O = Observation
 E = Expected value

 Therefore, expected frequency = Row total ×Column total

-----------------------------------
Grand Total
 Alpha = 0.05
 Degree of freedom < (C -1) (R-1)
(2-1) (2-1)
(1) (1)
1
 Table value is 3.84
Interpretation
The calculated value of chi-square (which is 0.0006319) is less than the given
table value of chi-square at 1, degree of freedom and level of significance 0.5. Hence
we accept the null hypothesis. If calculated value is less than the table value accept
the null hypothesis and reject the alternative hypothesis.
Calculated value =0.0006319 < 3.84

HO 2. Table showing success of government in promoting cash less money
Observed data table
YES, TO NO,NOT COMPETELY NOT

PARTICULARS SCALE SAME AT ALL SUCCESSFUL SAME TOTAL
EXTENT
Table showing Male 8 7 1 2 18

success of
government in
promoting cash Female 20 3 1 8 32
less money
Total 28 10 2 10 50
SCALE O.F E.F O-E (O-E)2 (O-E)2

E
Male
Yes, to same 8 10.08 2.08 4.3264 0.429
extent
No, not at all 7 3.6 3.4 11.56 3.2111
Completely 1 0.72 0.28 0.0784 0.1089

successful
Not same 2 3.6 1.6 2.56 0.7111
Female
Yes, to same 20 12.8 7.2 54.84 4.2844
extent
No, not at all 3 6.4 3.4 11.56 1.8063
Completely 1 1.28 0.28 0.0784 0.06125

successful
Not same 8 6.4 1.6 2.56 0.4
Total 50 11.01205

Where:
 O = Observation

-----------------------------------
Grand Total
 Alpha = 0.05
(4-1) (2-1)
(3) (1)
3
Interpretation
The calculated value of chi-square (which is 11.01205) is more than the given
we reject the null hypothesis. If calculated value is more than the table value reject
the null hypothesis and accept the alternative hypothesis.
Calculated value = 11.01205 > 7.81

H0 3: There is no impact of demonetization on middle income group
Observed data table
Particulars Scale YES NO Total
Less than 00 15 15
25 years
There is no
impact of
demonetisation Between 25- 10 20 30
on middle 45 years
income group
Above 45 02 03 05
years
Total 12 38 50
Expected (O –E)2
2 _________
Scale Observed frequency O-E (O –E)
E
YES 00 3.60 -3.60 12.96 3.60
Less than 25
years
NO 15 11.40 3.60 12.96 1.1368
YES 10 7.20 2.80 7.84 1.0888

Between 25-45
years
NO 20 22.80 -2.80 7.84 0.3438
YES 02 1.20 0.80 0.64 0.5333

Above 45

years
NO 03 3.80 -0.80 0.64 0.1684
Total =
6.8711
Where:
 O = Observation

-----------------------------------
Grand Total
 Alpha = 0.05
(2-1) (3-1)
(1) (2)
2
Interpretation
The calculated value of chi-square (which is 6.8711) is more than the given
we reject the null hypothesis. If calculated value is more than the table value reject
the null hypothesis and accept the alternative hypothesis.
Calculated value =6.8711 > 5.99

CHAPTER – 5
FINDINGS, SUGGETIONS ANDCONCLUSION
5.1 FINDINGS
 It is found that 56% of the respondents are male and rest 44% is females.
 It is found that 30% of the respondents belong to the age less than 25 years, 36% of the
respondents belong to the age between 25-45 years, and 34% of the respondents belong
to the above 45 years.
 It is found that 20% of respondents are graduate, 10% of respondents are under graduate,
38% of respondents are post graduate and rest 32% of respondents are qualified with
other courses.
 It is found that72% of respondents are married and rest 28% of respondents is unmarried.
 It is found that 40% of respondents are with 0-5 experience, 26% of respondents are with
5-10 years of experience, 2% of respondents are with 10-15 years of experience and rest
32% of respondents are with work experience above 15 years.
 It is found that60% of respondents are with the income between 1 lakh - 2 lakh per year,
12% of respondents are with income 2 lakh – 3 lakh per year, 14% of respondents are
with income 3 lakh – 4 lakh per year and rest 14% of respondents are with the income
level of above 4 lakh per year.
 It is found that98% of respondents are aware of the demonetization whereas only 2%
respondents are unaware of demonetization.
 It is found that the demonetization has impacted completely for 22% of respondents,
partially for 74% of respondents and 4% had no impact of demonetization.
 It is found that 32% of the respondent is benefited with the demonetization and it caused
damage to 68% of the respondents.
 It is found that94% of respondents agree that black money still exist in India whereas
only 6% of respondents says black money do not exist in India.

 It is found that 8% of respondents say demonetization has helped in curbing black

money, corruption and terrorism and 22% says no to it whereas the rest 70 % of
respondents says yes but believes that it needed better planning.
 It is found thatfor 68% of respondent’s demonetization caused inconvenience, 22% of the
respondents don’t mind the inconvenience caused to them and demonetization has not
caused any inconvenience to remaining 10% of respondents.
 It is found that 32% of respondents had to stand in a queues for 0-1 hour, 40% of
respondents for 1-3 hours, 24% of respondents are for 3-8 hours and rest 4% respondents
for over 8 hours to withdraw/ exchange some part of money.
 It is found that 58% of respondents have to forego their potential opportunity pertaining
to career/personal life due to currency shortage and remaining 42% have not.
 It is found that30% of respondents strongly agrees that demonetization have been
implemented in a phase manner, 4% respondents strongly disagrees, 56% respondents
agree and remaining 10% respondents disagrees to the statement.
 It is found that the regular routine of 68% of respondents is disrupted due to
demonetization and remaining 32% had no impact of demonetization on their regular
routine.
 It is found that22% of respondents says the rich people affected the most by the
demonetization, 50% of respondents says the middle class and remaining 28% says it’s
the poor people who has been affected the most because of demonetization.
 It is found that the 62% of the respondents are against the decision to issue the new Rs
2000 notes and only 38% are respondents are in favor of issuing Rs 2000 notes.
 It is found that 44% of respondents says yes, there could be an entry of fake Rs 2000
notes into market, 10% respondents says no, 34% says may be and rest 12% of
respondents are not sure about it.
 It is found that 4% of respondents believes that the primary motive of demonetization
was finance, 48% believes that it was a strike against corruption, 44% believes it was a
political move and remaining 4% believes there was other motive behind demonetization.
 It is found that56% respondents partially agrees that demonetization was a political move
just to effect other political parties in funding of UP elections, 36% respondents says it
was completely political move and remaining 8% disagree to the statement.

 It is found that the 48% of respondents say demonetization will not bring an end to black
money, corruption, terrorism and counterfeiting of currency.20% of respondents says it
will bring an end to black money, 18% says it will end corruption, 10% says it will end
terrorism and 4% says it will end counterfeiting of currency.
 It is found that 34% disagree that government was successful in eliminating black money
from the country. 18% of respondents strongly disagree, 6% of respondents strongly
agree, 26% are respondents neutral and rest 16% agree to the statement.
 It is found that 48% respondents says the ATM/Banks are not regularly re-stock with
cash, 24% says it was regularly re-stocked and rest 28% are not sure about that.
 It is found that 92% of respondents says that they faced difficulty in using new Rs 2000
notes in the market and remaining 8% of respondents says no to it.
 It is found that 54% of respondents says the time given to exchange the old Rs 500 and
Rs 1000 note was not sufficient and rest 46% says it was sufficient.
 It is found that 46% of respondents can’t say whether demonetization will improvement
in quality of life of common man. 4% respondents completely agree that it will improve
the quality of life, 20% partially agree and rest 30% respondents disagree to it.
 It is found that36% of respondents says currency ban was a bad experience, 30% says it
could have been improved, 14% says it was a good experience and rest 20% respondent
as can’t say.
 It is found that 40% of the respondent are not sure whether demonetization leads to the
loss of employment, 34% says it leads to loss of employment and remaining 26% says no
to it.
 It is found that66% of respondents are a aware of cash less transaction before
demonetization and rest 34% are unaware of cash less transaction before demonetization.
 It is found that 88% respondents agrees that demonetization leads to the increase in the
awareness level of cash less transaction after demonetization, 12% of respondents
strongly agrees to it and none of the respondents disagree to it.
 It is found that56% of respondents says yes, to some extent government was successful in
promoting cash less economy, 20% respondents says the government was not at all
successful, 4% says completely successful and remaining 20% are not sure.

 It is found that 62% of respondents partially agree that demonetization has impacted the
income generation level, 10% of respondents completely agrees and rest 28%
respondents disagrees to it.
 It is found that 82% of respondents say demonetization has impacted on the spending’s of
an individual, 8% of respondents say no to it and remaining 10% of respondents are not
sure.
5.2SUGGETIONS
 It is suggested that internet services connectivity be improvised in every part of our

country for better cashless transaction by one and all for internet, mobile and other
type of e-banking.
 It is suggested that all ATMs should have both withdrawal and deposit facilities,
regular and biometric facility.
 It is suggested that more number of branches per locality is needed to minimize the
account holders as well as bank staff hardship.
 It is suggested that almost all the urban bank account holders have been provided
either Debit card or ATM card by respective banks.
 It is suggested that to make compulsory that, these card holders should use card for all
purchases and other payments through ATMs or Swiping Machine available in the
banks and other outlets.
 It is suggested that Rs. 500, 100, 50 and other denomination notes be made available
to each branch sufficiently instead Rs. 2000 notes alone during this period.
 It is suggested that from 10am to 1pm let the Pensioners and Women alone be
allowed for withdrawals or deposits and from 1pm to 3/4pm current and other
account holder’s transactions be allowed.
 It is suggested that the government should educate everyone about the use of e-wallet
and Debit & Credit Cards. Proper classes about the use of e-wallet and cards should
be taken at each & every office, organization, companies etc.
 It is suggested that all the banks should provide their mobile application in order to
ease the money transfer, passbook entry and other services which will reduce the
number of visitor to the banks.

 It is suggested that the new notes should have been issued with additional security
features in order to prevent the entry of fake notes into the market.
 It is suggested that the Rs 2000 notes should have to be demonetized again since the
higher currency notes are thought to be friendly to corruption and make it easier to
hold black money.
 It is suggested that more time should be given in order to exchange the old notes.
 It is suggested that the proper pre planning was required in order to stabilize theGDP
of the country.
5.3 CONCLUSION
Demonetization is the act of stripping a currency unit of its status as legal tender.
Demonetization has been implemented in our country by our Prime Minister Narender Mody
on 08 November 2016 in order to fight against corruption, black money, terrorism and
counterfeiting of currency.
From the above study I would like to conclude that demonetization has both positive
and negative impact.
The move was not properly planed and hence the middle and lower income group
people had to suffer a lot from the move. The people had to stand in a queue for hours to
exchange or withdraw their own money that too not as per their requirements and there were
no separate rules made for women and senior citizens to easy the withdrawal/deposit process.
The banks/ ATM’s were not regularly filled with cash due to the high demand of cash
throughout the country. The people had to forego their potential opportunities pertaining to
career/personal life because of insufficient money supply. The people also faced difficulties
in using the new currency notes in the market. The higher currency notes are thought to be
corruption friendly and make it easier to hold black money. It also increases the risk of entry
of fake notes into market as the new notes do not possess any additional security feature.
However, this step has to be taken in order to eliminate many illegal activities that were
taking place in the country and in the county with more than 125 crore population the
outcome could be nothing else than this.

The demonetization is proved to be successful in promoting the cash less economy. In

the developing country like India where most of the people are illiterate, it is very important
to spread the awareness of cash less transaction among the people which will eliminate the
black money from the country and boost the economic development. By this move the ideal
money has come in the banks which will be used for the productive purposes and contribute
in the economic development of the nation.
To conclude, the demonetization has caused the disturbance in the life of middle and
lower income group people. But in long run it will bring plenty of benefits to entire nation
and contributes in the growth of the economy.

Chapter-1: Impact of Demonitization On Middle and Lower Income Group

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Chapter-1: Impact of Demonitization On Middle and Lower Income Group

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IMPACT OF DEMONITIZATION ON MIDDLE AND LOWER INCOME GROUP

1.1.1 BUSINESS FINANCE

1.1.2 MEANING OF BUSINESS

1.1.3 MEANING OF FINANCE

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1.1.4 DEFINITION OF BUSINESS FINANCE

1.2 INTRODUCTION TO DEMONITIZATION

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On 8 November 2016, the Government of India announced the demonetization of

Prime Minister of India Narendra Modi announced the demonetization in an unscheduled

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Demonetization is the act of stripping a currency unit of its status

Demonetization for us means that Reserve Bank of India has

AL-AMEEN ARTS, SCIENCE AND COMMERCE COLLEGE Page 4

Process of removing a currency from general usage, or

On 28 October 2016 the total banknotes in circulation in India was ₹17.77

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In 2015, the Zimbabwean government demonetized the Zimbabwean dollar as a way to

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3) Stopping terror funds: because of demonetization, the people or organizations who

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1.2.5 POSITIVE AND NEGATIVE IMPACTS OF DEMONETIZATION ON THE

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1.2.6 POSITIVE EFFECT

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1.2.7 NEGATIVE EFFECT

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Stock market crash

As a combined effect of demonetization and US presidential election, the stock market

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Nitin Gadkari, the Minister of Transport, subsequently announced a suspension of toll

Dumping of agricultural produce

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Forecast of GDP growth rate

Drop in industrial output

Income tax raids and cash seizures

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Seizures of ₹2000 notes

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1.2.8 EVASION ATTEMPTS

Multiple bank transactions

As soon as the demonetization was announced, it was observed by the Indian

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Municipal and local tax payments

1.2.9 REASONS FOR DEMONETIZATION

1) To tackle black money in the economy.

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1.2.10 ADVANTAGES OF DEMONETIZATION

1. A major advantage is that demonetization helped the government track black

1.2.11 DISADVANTAGES OF DEMONETIZATION

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1.3 DEMONETIZATION IMPACT ON VARIOUS SECTORS

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1.4 IMPACT OF DEMONETIZATION ON COMMON MAN

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The tax effect

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1.5 IMPACT OF CEMONETIZATION ON MIDDLE AND LOWER INCOME GROUP

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2.1 INTRODUCTION TO RESEARCH DESIGN

2.2 TITLE OF THE STUDY