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Asia Pacific Journal of Research

ISSN (Print): 2320-5504


ISSN (Online): 2347-4793

THE IMPACT OF DEMONETISATION OF CURRENCY IN THANJAVUR CITY

Shukun Karthika. G1, Devika. S. P2.


1
Department of Management Studies, Periyar Maniammai University, Vallam,
2
Department of Management Studies, Periyar Maniammai University, Vallam.

ABSTRACT

The study on impact of demonetization is always being the argument which is not in favour of demonetisation even by the
educated people and the cash that would be extinguished would be “black money” or “counterfeit notes” and hence, should be
rightfully extinguished to set right the perverse incentive structure in the economy. While the facts are not available to anybody, it
would be foolhardy to argue that this is the only possibility. Further, the impact of such a move would vary depending on the
extent to which the government decides to remonetise. This paper elucidates the impact of such a move on the availability of
credit, spending, and level of activity with the government finances, and can find how much people understand about
demonetization. In this paper we considered the samples of 100 respondents who were randomly selected from Thanjavur city.

Keywords: Demonetisation, Impact of Demonetisation, Black money, Counterfeit Notes, Thanjavur.

I. INTRODUCTION:
Demonetisation played a very important role in all over the India. This big move completely changed the whole
economic level of India. This drastic step made India astonished. The process of changing old currency into new form is named as
demonetization. Demonetization is to eradicate the black money and counterfeit notes. Demonetisation was proposed by Prime
Minister Narendra Modi on 8th November 2016 night at 8.15 p.m. The Rs. 500 and Rs. 1000 note were demonetised by the Indian
Government.
DEMONETIZATION IN INDIA:
 1946: Rs. 1,000, Rs. 5,000, and Rs. 10,000 notes were taken out of circulation on January 1946. Rs. 10,000 notes were
the largest currency denomination ever printed by the Reserve Bank of India, which were introduced for the first time in
1938. All three notes were reprinted and introduced in 1954.
 Previous Indian governments had demonetized bank notes. In January 1946, bank notes of Rs. 1,000, Rs. 5,000, and Rs.
10,000 notes were taken out of circulation. In the year 1945, all three notes were reprinted and introduced.
 In 1977, Wanchoo committee (set up in 1970s), a direct tax inquiry committee, suggested demonetization as a measure to
unearth and counter the spread of black money.
 On 28 October 2016, the total banknotes in circulation in India was Rs.17.77 trillion (US$260 billion). In terms of value,
the annual report of Reserve Bank of India (RBI) of 31 March 2016 stated that total bank notes in circulation valued to
Rs.16.42 trillion (US$240 billion) of which nearly 86% (around Rs.14.18 trillion (US$210 billion)) were Rs.500 and
Rs.1,000 banknotes. They were taken out of circulation from 2016.
II. REVIEW OF LITERATURE:
Sukanta Sarkar (2010) conducted a study on the parallel economy in India: Causes, impacts & government initiatives in
which the researcher focused on the existence of causes and impacts of black money in India. According to the study, the main
reason behind the generation of black money is the Indian Political System i.e. Indian govt. just focused on making committees
rather than to implement it .The study concludes that laws should be implemented properly to control black money in our
economy.
Tax Research Team (2016) in their working paper stated in favour of demonetization, its main objective is to analyze the
impact of demonetization on Indian economy. This paper shows the impact of such a move on the availability of credit, spending,
and level of activity and government finances.

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Asia Pacific Journal of Research
ISSN (Print): 2320-5504
ISSN (Online): 2347-4793
Veerakumar. K (2017) people impact on demonetization, its main objective is to analyze the demographic profile of the
respondents in Coimbatore District and to identify the people’s impact on demonetization. By using Simple Percentage, Chi-
Square Test and Ranking Method be data is being analysed.

III. RESEARCH METHODOLOGY:


Thanjavur City is the study area selected for the research. Primary data was collected through proper questionnaire. Samples
for 100 respondents in Thanjavur City have been selected using random sampling method. The collected information were
reviewed and consolidated into a table. For the purpose of analysis, the data were further processed by using statistical tools.

3.1. OBJECTIVES:
 To identify the people difficulties due to demonetizations.
 To measure the impact of demonetization on the regular life of public.
 To evaluate which type of class were mostly affected during demonetisation.
 To know the level of awareness about cashless transaction among illiterates.
3.2. NEED FOR THE STUDY:
 The counterfeit Indian currency notes in higher denomination have increased.
 Unaccounted money (i.e. Black money), often used in many form of corruption and illegal activities.
 The Financial Action Task Force, a global body that looks at the criminal use of the international financial system, notes
that high-value bills are used in money laundering schemes, racketeering, etc.,
 In India, up until now the highest denomination note was Rs 1,000 and this was 1,000 times the smallest denomination
note of Re 1.
3.3. RESEARCH DESIGNING:
3.3.1. Sampling Size:
The number of respondent chosen was 100 samples for this research referred to Thanjavur City.
3.3.2. Sampling Technique:
 Random sampling technique was adopted to choose 100 samples among the general public of Thanjavur city.
3.3.3. Methods of Data Collection:
 Primary data were collected among the public in Thanjavur City which were in the form of interview through a
structured questionnaire.
 Secondary Data were retrieved from various journals, articles, eBooks, website, newspaper.
3.3.4. Tools for Data Analysis:
Simple percentage and linear regression were used to analyse the data and the result were presented pictographically
using chats.
IV. DATA ANALYSIS:
Most Affected
Upper Class 13%
Middle Class 58%
Lower Class 29%
Table No.4.1
Factors Strongly Agree Neutral Disagree Strongly
agree disagree
There were many difficulties when you had money
33% 44% 19% 2% 1%
with your hand at the time of demonetization.

Awareness of cashless society 17% 14% 16% 41% 12%

Table No. 4.2

Table No. 4.3 shows the regression of the demonetisation on the regular life of the public:

 Null hypothesis (H0): There exists no significant relationship between the impact of demonetisation on regular life of the
public.
 Alternate hypothesis (H1): There exists significant relationship between the impact of demonetisation on regular life of
the public.


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Asia Pacific Journal of Research
ISSN (Print): 2320-5504
ISSN (Online): 2347-4793
 Unstandardized Standardized   95.0% Confidence
Co linearity Statistics
 Coefficients Coefficients   Interval for B
Model T Sig.
Lower
B Std. Error Beta Upper Bound Tolerance VIF
Bound

(Constant) 1.130 .208 5.443 .000 .718 1.542

Difficult .320 .094 .341 3.416 .001 .134 .507 .128 7.842
 personal life .068 .078 .066 .871 .386 -.087 .223 .223 4.481
1
Changes of Rs.
-.070 .077 -.088 -.908 .366 -.223 .083 .135 7.421
2000

cashless society .080 .052 .122 1.533 .129 -.024 .185 .199 5.020

a. Dependent Variable: regular life

TABLE NO.: 4.3

V. INFERENCE:

Table No. 4.1 describes that 58% of the respondent belongs to middle class people who were mostly affected during
demonetisation.
Table No. 4.2 shows the peoples difficulties due to demonetisation and evaluate the awareness about the cashless
transactions among the illiterate. 44% of respondents agree that there were difficulties when they had money at the time of
demonetisation. And 41% of people disagree and say that they are not aware of the cashless society.

Table No. 4.3 describes that Alternate hypothesis one (H1) is accepted as there exists significant relationship between the
impact of demonetisation on regular life of the public were is .881.

V. FACTORS IMPACTING THE PEOPLE’S ON DEMONETIZATION:


The above table shows about the simple percentage and linear regression of each factor regarding the impact of
demonetization. From the calculated value of correlation and linear regression demonetization there were many difficulties is been
the first by the respondents and it is followed by currency shortage, cashless transaction, personal problems faced by common
people, etc.
VI. CONCLUSION:
Simple percentage and linear regression analyses were conducted to examine the relationship between the difficulties,
regular life, type of class affected and awareness about cashless society. The middle class people were more affected than other
classes. People agree that they had difficulties when they had cash in their hand at the time of demonetisation. Even people agree
that they were not aware of cashless society. And the regression result shows that alternative hypothesis is accepted as is .881.
VII. REFERENCES:
1. Ahuja, R. (2007). “Social Problems in India” (2nd Ed). Jaipur: Rawat Publications.
2. Nafees. A. Khan, P. T. Chaudhary, "Black Money: Its Impact on the Indian Economy," Tax Reforms in India (Ed.),
Srinawas Publications, Jaipur, pp. 150- 155, 2003.
3. Sukanta Sarkar (2010). “The parallel economy in India: Causes, impacts & government initiatives”. Economic Journal of
Development Issues, Volume 11-12 No. (1-2) p.124-134.
4. Vijay Kumar Singh, (January 2009) “Controlling money laundering in India – problems & perspectives” To be presented
at the 11th Annual Conference on Money and Finance in the Indian Economy- At the Indira Gandhi Institute of
Development Research
5. CA Lalit Mohan Agarwal (2012), edit. “White Paper on Black Money”, Journal of Securities Academy & faculty for e-
education, vol.72.
6. Tax Research Team, Demonetisation: Impact on the Economy No. 182 14-Nov-2016 , National Institute of Public
Finance and Policy ,New Delhi.
7. Shanmugapriya. S & Veerakumar. K, (2014) “Determinants of Investment decision on Online Commodities” Acme
International Journal of Multidisciplinary Research, Vol 2, Issue 9, September- 2014. P.No.39-45.
8. Veerakumar. K,(2017), “A study on people impact on demonetization”, IJIRAH, Volume 2, Issue 1.
9. http://www.nipfp.org.in/media/medialibrary/2016/11/WP_2016_182.pdf, REVIEWED: 10 FEB 2017.
10. http://www.investopedia.com/terms/d/demonetization.asp, REVIEWED: 12 FEB 2017.

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