Impact on Demonetization in India

Abstract

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. In an important move, the Government of India declared that the five hundred and one thousand rupee notes will no longer be legal tender from midnight, 8th November 2016. The RBI will issue Two thousand rupee notes and new notes of Five hundred rupees which will be placed in circulation from 10th November 2016. Notes of one hundred, fifty, twenty, ten, five, two and one rupee will remain legal tender and will remain unaffected by this decision. Since our economy is heavely depend on cash, as only less then half the population users banking system for monetary truncations Demonetization hit trade and consumption hard with the people scrambling for cash to pay for goods and service.