{"id":167,"date":"2018-04-16T06:09:27","date_gmt":"2018-04-16T06:09:27","guid":{"rendered":"https:\/\/blog3.indifi.com\/?p=167"},"modified":"2024-09-27T11:10:49","modified_gmt":"2024-09-27T11:10:49","slug":"top-5-impacts-post-demonetization","status":"publish","type":"post","link":"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/","title":{"rendered":"More Than Two Years Post-Demonetisation \u2014 The Top 5 Positive Impacts On Business Growth &#038; Development"},"content":{"rendered":"<div class=\"wp-block-image size-medium wp-image-657\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/blog3.indifi.com\/wp-content\/uploads\/2018\/04\/More-than-a-Year-Post-Demonetisation\u200a\u2014\u200aThe-Top-5-Positive-Impacts-on-Business-Growth-the-Overall-Economy-450x300.jpeg\" alt=\"More than a Year Post-Demonetisation\u200a\u2014\u200aThe Top 5 Positive Impacts on Business Growth &amp; the Overall Economy\" class=\"wp-image-657\" width=\"822\" height=\"548\"\/><\/figure><\/div>\n\n\n<p><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_67_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#What_is_Demonetisation\" title=\"What is Demonetisation?\">What is Demonetisation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#INDIAN_GOVERNMENTS_PERSPECTIVE_ON_THE_DEMONETISATION_INITIATIVE\" title=\"INDIAN GOVERNMENT&#8217;S PERSPECTIVE ON THE DEMONETISATION INITIATIVE\">INDIAN GOVERNMENT&#8217;S PERSPECTIVE ON THE DEMONETISATION INITIATIVE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#The_Top_5_Positive_Impact_of_Demonetisation_On_Indian_Economy\" title=\"The Top 5 Positive Impact of Demonetisation On Indian Economy\">The Top 5 Positive Impact of Demonetisation On Indian Economy<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#1_The_Move_Towards_A_Digital_Economy\" title=\"1. The Move Towards A Digital Economy\">1. The Move Towards A Digital Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#2_Black_Money_Reduced_Significantly\" title=\"2. Black Money Reduced Significantly\">2. Black Money Reduced Significantly<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#3_Significant_Boost_To_Financial_Institutions\" title=\"3. Significant Boost To Financial Institutions\">3. Significant Boost To Financial Institutions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#4_Deathblow_To_Shell_Companies_And_Hawala_Transactions\" title=\"4. Deathblow To Shell Companies And Hawala Transactions\">4. Deathblow To Shell Companies And Hawala Transactions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#5_Massive_Shift_In_Investment_Habits\" title=\"5. Massive Shift In Investment Habits\">5. Massive Shift In Investment Habits<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#REFINING_THE_STRATEGY_FOR_OPTIMAL_DEMONETISATION_EXECUTION_IN_INDIA\" title=\"REFINING THE STRATEGY FOR OPTIMAL DEMONETISATION EXECUTION IN INDIA\">REFINING THE STRATEGY FOR OPTIMAL DEMONETISATION EXECUTION IN INDIA<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#Final_Thoughts\" title=\"Final Thoughts\">Final Thoughts<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#FAQs\" title=\"FAQs\">FAQs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#Who_Benefited_from_Demonetisation\" title=\"Who Benefited from Demonetisation?\">Who Benefited from Demonetisation?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.indifi.com\/blog\/top-5-impacts-post-demonetization\/#What_are_the_Outcomes_of_Demonetisation\" title=\"What are the Outcomes of Demonetisation?\">What are the Outcomes of Demonetisation?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Demonetisation\"><\/span>What is Demonetisation?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Demonetisation is the governmental process of rendering the current authorized currency obsolete. A notable example is the decision made by the Indian Government on November 8, 2016, wherein the existing 500 and 1000 denomination notes were declared invalid starting midnight on the same day. <\/p>\n\n\n\n<p>As of November 8, 2016, India&#8217;s paper currency denominations included Rs. 5, 10, 50, 100, 500, and 1000. Through the demonetisation of the Rs. 500 and Rs. 1000 currency notes, the Indian Government opted to introduce new currency notes in the denominations of Rs. 500 and Rs. 2000 into circulation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"INDIAN_GOVERNMENTS_PERSPECTIVE_ON_THE_DEMONETISATION_INITIATIVE\"><\/span>INDIAN GOVERNMENT&#8217;S PERSPECTIVE ON THE DEMONETISATION INITIATIVE<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Indian Government implemented demonetisation in India with several key objectives:<\/p>\n\n\n\n<ol>\n<li>Curbing the circulation of black money.<\/li>\n\n\n\n<li>Disrupting monetary support to anti-national activities and reducing terrorist financing.<\/li>\n\n\n\n<li>Enhancing the tax base by identifying and addressing tax evasion.<\/li>\n\n\n\n<li>Encouraging the adoption of digital transactions and plastic money in the country.<\/li>\n<\/ol>\n\n\n\n<p>Driven by the noble vision of eradicating black money and uncovering tax evasion, the Demonetisation initiative was undertaken to foster transparency and accountability in the financial system.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.indifi.com\/msme-loans?utm_source=Organic&amp;utm_medium=Blog&amp;utm_campaign=CTA_T\"><img decoding=\"async\" loading=\"lazy\" width=\"500\" height=\"91\" src=\"https:\/\/www.indifi.com\/blog\/wp-content\/uploads\/2024\/01\/Loan-to-Expand-Your-Business-500x91.jpg\" alt=\"\" class=\"wp-image-6696\" srcset=\"https:\/\/www.indifi.com\/blog\/wp-content\/uploads\/2024\/01\/Loan-to-Expand-Your-Business-500x91.jpg 500w, https:\/\/www.indifi.com\/blog\/wp-content\/uploads\/2024\/01\/Loan-to-Expand-Your-Business.jpg 716w\" sizes=\"(max-width: 500px) 100vw, 500px\" \/><\/a><\/figure><\/div>\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Top_5_Positive_Impact_of_Demonetisation_On_Indian_Economy\"><\/span>The Top 5 Positive Impact of Demonetisation On Indian Economy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Here are few positive effects of demonetisation in the India economy<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_The_Move_Towards_A_Digital_Economy\"><\/span>1. The Move Towards A Digital Economy<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>India has always been a cash-based economy for eons. Post demonetisation, nearly 86% of the total currency in circulation was nullified. This meant that people finally had the impetus to shift to digital payments.<\/p>\n\n\n\n<p>In a country, where internet penetration now reaches even the remotest corners and the proliferation of Smartphones is at an all-time high, we were still using cash for a majority of our daily transactions. Post demonetisation, this changed big time.<\/p>\n\n\n\n<p>Digital payments witnessed an exponential growth up to 40\u201370% compared to 20\u201350% earlier. With further reforms from the government, today a vast majority of the Indian population, both urban and rural are using mobile apps and digital wallets to send and receive cash.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Black_Money_Reduced_Significantly\"><\/span>2. Black Money Reduced Significantly<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Post demonetisation, nearly 9.1 million new taxpayers have been added to the list, and the number of individual tax returns has reached an all-time high of 25.3%. More money entering the government coffers increases the availability of funds for various social and economic development projects.<\/p>\n\n\n\n<p>Additionally, demonetisation helped to identify individuals who have been evading taxes for years. Nearly 17.92 lac individuals have been reviewed by the tax department since their tax profiles and the cash deposits made after demonetisation were way out of sync.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Significant_Boost_To_Financial_Institutions\"><\/span>3. Significant Boost To Financial Institutions<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Post demonetisation, banks, and other financial institutions have seen a substantial increase in deposits. Nearly, 30 Crore families opened bank accounts for the first time using the Jan Dhan scheme, and zero-balance deposits reduced from a massive 77% to 20% post-demonetisation.<\/p>\n\n\n\n<p>All the excess cash in circulation has made its way into official channels. This meant that the interest rate cuts by the central government could be passed on to the borrowers.<\/p>\n\n\n\n<p>This means you can now avail <a href=\"https:\/\/www.indifi.com\/msme-loans?utm_source=Organic&amp;utm_medium=Blog&amp;utm_campaign=CTA_\">business development loans <\/a>and other financial products at affordable rates.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Deathblow_To_Shell_Companies_And_Hawala_Transactions\"><\/span>4. Deathblow To Shell Companies And Hawala Transactions<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Post demonetisation, the government has shut down nearly 3 lac shell companies, which were siphoning black money. This number was mentioned by our Honorable Prime Minister, Mr. Narendra Modi in his speech on Independence Day.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Massive_Shift_In_Investment_Habits\"><\/span>5. Massive Shift In Investment Habits<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>For years, the primary method of savings for Indians was to stockpile cash notes at home or use bank fixed deposits. Post demonetisation, millions of investors are looking for alternative investment choices. This has led to the massive spike in the popularity of equities and mutual funds.<\/p>\n\n\n\n<p class=\"has-vivid-green-cyan-color has-text-color\">Also Read: <a href=\"https:\/\/blog.indifi.com\/factors-contribution-development-nbfcs\/\">Factors That Contributed To The Development Of NBFCs In India<\/a>  <\/p>\n\n\n\n<p>Retail investors are gradually moving away from low-return investments like fixed deposits to high-yield options like mutual funds. Similarly, real estate has become streamlined and reduced cash-based investments significantly.<\/p>\n\n\n\n<p>Additionally, life insurance premium collection has gone up to 113% post demonetisation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"REFINING_THE_STRATEGY_FOR_OPTIMAL_DEMONETISATION_EXECUTION_IN_INDIA\"><\/span>REFINING THE STRATEGY FOR OPTIMAL DEMONETISATION EXECUTION IN INDIA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Enhancing accountability is crucial for uncovering black money. To ensure the success of demonetisation, a strategic approach involves channeling cash directly into bank accounts, facilitating withdrawals through ATMs or banks. <\/p>\n\n\n\n<p>Expanding the Jan Dhan Yojna could have been transformative if the government mandated all banks to swiftly open instant accounts for those without any, depositing funds into these accounts. This approach would have allowed the government to identify money hoarders and black money holders, while providing basic savings accounts to all Indians, fostering an uptick in digital transactions.<\/p>\n\n\n\n<p>An unforeseen challenge arose with the need to recalibrate ATM machines for dispensing new currency notes. To mitigate this, the government could have pre-emptively planned to print redesigned 500 and 1000 rupee notes with identical dimensions but distinctive features. This foresight would have obviated the necessity for widespread ATM recalibration, ensuring the immediate dispensing of the new currency.<\/p>\n\n\n\n<p>Furthermore, depositing the new currency into circulation prior to the announcement of demonetisation would have alleviated the ensuing cash crunch, fostering better governance. This proactive measure could have significantly eased the transition, maintaining liquidity and averting disruptions in the financial landscape.<\/p>\n\n\n\n<p>Also Read:- <strong><a href=\"https:\/\/www.indifi.com\/blog\/pmegp-loan\/\" target=\"_blank\" rel=\"noreferrer noopener\">PMEGP Loan Scheme | Interest Rates, Full Form, Apply Online<\/a><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Final_Thoughts\"><\/span>Final Thoughts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There\u2019s no arguing the fact that demonetisation is a reform of huge magnitude. And, it\u2019s bound to have challenges on the way. But, it pays to be prudent and take a look at its outcomes on the economy in the long run. And, that has been hugely positive and boosted business growth in all sectors.<\/p>\n\n\n\n<p class=\"has-vivid-green-cyan-color has-text-color\"><a href=\"https:\/\/www.indifi.com\">Apply For Business Loans In India Without Security<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_Benefited_from_Demonetisation\"><\/span>Who Benefited from Demonetisation?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Increased Savings<\/strong>: Because of demonetisation, people started depositing their cash in banks instead of keeping it at home. This helped them save more money.<\/p>\n\n\n\n<p><strong>Lower Lending Rates<\/strong>: With demonetisation, more money moved from people to banks and financial institutions. This improved the circulation of money, leading to lower lending rates.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Outcomes_of_Demonetisation\"><\/span>What are the Outcomes of Demonetisation?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Impact on the Indian Economy<\/strong>:<\/p>\n\n\n\n<p>Demonetisation has had a major impact on the Indian economy. It caused a sudden stop in consumption activities across the country. This slowdown might last for a few months, leading to a significant drop in GDP compared to the previous year.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Demonetisation? Demonetisation is the governmental process of rendering the current authorized currency obsolete. A notable example is the decision made by the Indian Government on November 8, 2016, wherein the existing 500 and 1000 denomination notes were declared invalid starting midnight on the same day. As of November 8, 2016, India&#8217;s paper currency [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[141],"tags":[27],"_links":{"self":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts\/167"}],"collection":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/comments?post=167"}],"version-history":[{"count":23,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts\/167\/revisions"}],"predecessor-version":[{"id":13068,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/posts\/167\/revisions\/13068"}],"wp:attachment":[{"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/media?parent=167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/categories?post=167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.indifi.com\/blog\/wp-json\/wp\/v2\/tags?post=167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}