history, reasons, effect, pitfalls, conlusion etc

1. Effect of
Demonetization
Dr. Tushar Chaudhari,
Assistant professor,
Seth Kesarimal Porwal College, Kamptee

2. OVERVIEW
 Demonetization
 History
 Reasons
 Positive impact
 Pitfall
 Analysis
 Conclusion

3. DEMONETIZATION
 Demonetization 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

4. COUNTRIES WHO HAVE DONE THIS BEFORE
 GHANA
 ZIMBAWE
 AUSTRALIA
 NEWZEALAND
 USA
 EUROPIAN UNION
 SINGAPORE
 NORWAY
 UK
INDIA

5. GLOBAL CONTEXT

7. INDIAN CONTEXT

9. INDIAN CONTEXT

11. INDIAN CONTEXT

13. INDIAN CONTEXT

15. Pradhan Mantri Jan Dhan
Yojana
(25.98cr Bank accounts)
Income Declaration Scheme
(Rs.65,250cr disclosed)
Demonetization

18. REASONS FOR DEMONETIZATION
Black
money
Fake
currency
Boost
saving
and
deposit
Reduce
money
lending
rates

19. REASONS FOR DEMONETIZATION
Cash less
transaction
Revenue for
government
project

20. REASONS FOR DEMONETIZATION
Politically
motivated
Reduce NPA of
nationalized
bank

22. POSITIVE IMPACT (SOCIAL)
Moist Hit
stone-pelting
in J&K
Corrupts
burning cash

23. POSITIVE IMPACT (ECONOMIC)
record recoveries of house
tax
Electricity companies making
huge record recoveries
Huge opportunities for mobile
wallets
Property prices come down
by 25%

24. PITFALLS

25. STRUCTURAL
unpreparedness
Information may have leaked
insufficient infrastructure
Root of the problem is
untouched
ATM were not in coordination
with new currency.

26. OTHER
Future Planning by
marketers
Lots of chaos
trouble in arranging
family programs
Economic activity
takes bearing

28. BLACK MONEY
 Only 3 % to 7 % of black money is in form of
cash.
 11.55 lakh crore have been deposited just
before demonetization day.
 It was estimated that 70 lac crore black money
will be recovered but only 4 lac crore has been
recovered. (0.5% of GDP)
 Others form of black money in terms of real
estate, gold, politician money, deposit in foreign
bank are still not been evaluated.

29. CORRUPTED MONEY AND TERRORISM
 Public servant will not face enquiry without
prior permission of government.(anti Grift
Law)
 Diluting FCRA Act.
 Participatory notes
 Fake currency :- no data have been
published yet.

30. DIGITIZATION
 Demonetization and digitalization are
separate concept.
 Not enough infrastructure for digitization
 POS machine have been imported from
china.
 Maximum ATM & Debit card are in with
foreign collaboration, hence profit will go to
foreign company.
 ATM were not in tune with new currency.

31. ECONOMY TOTAL EXPENDITURE (1,28,440
CRORE)
61,500
15,000
16,800
35,140
Rs. in Crore
Cost to
enterprise
Cost of people
queing up
Cost to center,
RBI
cost to bank

33. INDUSTRY
Small business,
Entertainment ,
luxury items
• Has come down
• Hard time to
cope
Bank
• Suffer lot of
problems
• Deposited with
RBI1.5 Crore
• Rate of deposit
come down
• Defaultation
increases
FDI
• Will likely to
increase
E-commerce
• Most increased

34. SOCIAL IMPACT
 Job Loss
 Construction workers
 MNERGA hires falls by 23%
 Toll Tax loss 1,238 Crore
 Death issues