IMPACT OF DEMONETIZATION IN INDIAN ECONOMY

Abstract

While this is the third time in the Indian history that Indian high value currency has been stripped of its status as a legal tender, the first two instances of demonetization did not have an impact like the recent one. This is primarily because, this time, the demonetized currency represents 86% of the total currency in circulation.Immediate impact Peoples purchasing power would be lowered resulting in a reduction in demand since they are left with no case. Though some may presume that prices will fall as supply would exceed demand, there is a possibility of prices rising if supply too is curtailed.Since money supply has been severely contracted, certain sectors will be hit hard as cash transactions will stop. As income and consumption are closely linked to transactions, they would be severely contracted. The most of the people affected in demonstration India