Demonetization And Its effects on Indian Economy

2. Demonetisation And
Indian Economy

3. • Meaning - Demonetisation is the act of
stripping a currency unit of its status as legal
tender
• It is the process of ceasing to produce and
circulate particular forms of currency
• Examples for demonetised countries
• Zimbabwe
• Australia
• Libya
• Iraq

4. • Many developed countries gave positive response on
demonetisation
• Anil Bokil : The man behind demonetisation
Stages lead to demonetisation
• Pradhan Mantri Jan Dhan Yojana
Total 25.98cr Bank accounts has been opened
• Income Declaration Scheme
Total amount of Rs.65,250cr has been disclosed

5. BACKGROUND OF DEMONETISATION
• Indian rupee is the official currency of republic of India.
• Reserve bank manages currency in India.
• The rupee is named after silver coin, RUPIYA, first
issued by Sultan Sher Shah Suri.
• In 2010 a new symbol was officially introduced. It was
derived from the combination of Devanagari consonant
“र” (ra).
• The first series of coins with the new rupee symbol
started in circulation on 8th july 2011.

6. • India’s first demonetization was in January 1946 and
again in 1978.
• The highest denomination note ever printed by the
Reserve Bank of India was Rs 10,000 note in 1938
and again in 1954.

7. • Rs1000 and Rs10,000 banknotes were in circulation
prior to January 1946.
• Rs1000 note made a come back in November 2000, and
Rs500 came into circulation in October 1987.
• In October 1987 Rs.500 banknotes was introduced with the
portrait of Mahatma Gandhi.
• Rs 50 and Rs 100 banknotes were issued in August 2005,
followed by Rs500, Rs1000 denominations in October
2005, and Rs10 and Rs20 in April 2006.

8. OBJECTIVES FOR
DEMONETIZATION
• Increased fake currency notes.
• Fake notes used for anti national and illegal
activities.
• Misused by terrorist for hoarding black
money.
• Non disclosure of source of income.
• Corruption

9. POSITIVE IMPACT
• It is a positive shock to the Indian economy and society.
• This will send a strong signal about the Indian anti
corruption drive.
• Money flow becomes systematic and controllable
through banking transaction.
• Raising use of credit/debit cards, net banking and other
online payment mechanism.
• In the immediate run, we are likely to witness larger
bank deposits, price correction and better tax
possibilities in the economy.
• Tax revenues will increase.
• Increase in GDP.(long-term)

10. NEGATIVE IMPACT
• As of current reports GDP declined drastically.
• Ongoing activities will be difficult to progress.
• Purchase of fertilizers and agro products.
• Even it could affect E-commerce companies.
• It affects day to day transaction.
• It effects a large number of employees.
• Heavy work load to bank employees.

11. • Difficult to manage emergency situations.
• It effects unorganized sectors for payments.
• People may start to save black money in form
of gold, properties, silver.
• Foreign travelers will get effected.
• It effects rural area people.
• It effects real estate, financing.
• It affects liquidity position in country.

13. Challenges faced by banks
• To ship enough money into economy.
• ATMs are to be reconfigured.
• Overload to employees.
• Difficult to handle customers.
Challenges faced by government
• To overcome criticisms.
• To improve demonetisation move.
• To avoid illegal practices.
• To bring cash-less mode economy.

14. DEMONETISATION EFFECT ON STOCK
MARKET
• BSE Sensex opened with a massive loss
• Rupee appreciation in the Foreign exchange market
is also expected.
• Lot of investors are withdrawing capital from stock
market.
• On Consumer Discretionary stocks.
• On Pharmaceutical stocks.

15. CONCLUSION
• Cash less economy
• Educate the people in the subject of use of
electronic cards will be required
• Helps in restriction of Corruption and terrorism
• Other countries also decided to go for
demonetization
• Rupee value is appreciated