Effectiveness of Demonetization in India in 2016: A Critical Analysis
Author : Dr. L Debendra Singh
Abstract :
Demonetization policy is generally resorted to when the economy is experiencing some abnormal situations. Historically, the policy of demonetization was used when the economy suffered from hyperinflation, war, political upheavals or other extreme circumstances. The government of India announced its demonetization policy recently on the 8th November 2016 with the objectives of destroying the black money and corruption, to check the counterfeit money and terror funding by withdrawing legal status of the high currency notes of 500 and 1000 which accounted for 86 per cent of the total currencies in circulation. Here, a critical review s made to examine the rationale for the policy pursued by the government and its efficacy to address the stated objectives on the basis of the historically available information, media reports and data released by different organizations and reserve bank of India after the implementation of the policy. The paper also examines alternative options, other than the demonetization, to address the current objectives so as to minimize the pains and sufferings experienced by the common people during the window period of 50 days.
Keywords :
Demonetization, black money, corruption, counterfeit money, hyperinflation, window period.
