A Study of Cashless Economy: The effect of

demonetization on small and medium businesses

Presented by :-
Aman Shaikh (121091)
Hashim Makwa (121042)
 Table of Contents

 Introduction

 Literature Review

 Research Methodology

 Research Objective

 Research Limitations
 Introduction

Cashless economy is an economic system which aims at reducing, not

eliminating the amount of physical cash circulating in transactions. A cashless
economy, according to Adewale (2012), simply illustrates a gradual or a radical
movement of the entire payment system of an economy from the use of physical
cash to a systemic adoption of other nonphysical cash mode of payments in
settlement of all types of transactions, including all commercial, homes,
personal, local and international trade both in public and private life within the
economy. Under the cashless payment system, customers could do their normal
basic transactions like payment for goods and services, person to person transfer
directly on their electronic devices. Both parties in a transaction require to have
these facilities. The digital payment facilities don’t limit to commercial
transactions, but also extend to payment of utility bills, school fees, hotel
bookings, house rents etc.

Demonetization is the act of stripping a currency unit of its status as legal

tender. It occurs whenever there is a change of national currency. The current
form or forms of money is pulled from circulation and retired, often to be
replaced with new notes or coins. Sometimes, a country completely replaces the
old currency with new currency. The Indian government has demonetized bank
notes on two prior occasions—once in 1946 and then in 1978—and in both
cases, the goal was to combat tax evasion by "black money" held outside the
formal economic system. The process of demonetization in November 2016
made an impact in all major sectors of the country like Banking, Railways,
Stock Markets, Transportation and Agriculture.

Demonetization can also be referred to as the process of moving people from a

cash-based system to a cashless system (digital systems). The cashless system
or electronic system which records the transactions through digitalized
mechanisms for safer flow of money in the economy is referred to as
Digitalization. It is the integration of digital technologies into everyday life by
the digitization of everything that can be digitized. The literal meaning
of digitalization gives an apparent idea of development and technology
dependent world.
 Literature Review

Various literature fortifies that cashless economy is an economic system in

which goods and services are exchanged through electronic form. It is a process
of adopting ICT facilities in economic transactions. The following academic
texts, articles and research papers are useful in explaining the degree and nature
of the impact of demonetization among small-medium enterprises:

Basel Committee (1998) expressed the difficulty in rightly defining the

electronic money but agreed that it blends technological and economic
characteristics.
1. “The Informal Sector as a Global Economy” by Jan Bremen
2. Article “Modi’s Demonetization Move May Have Permanently
Damaged India’s Informal Sector” by Pronab Sen, Country Director
for the India Central Programmer of the International Growth Centre
(Nov. 2016)
3. Report titled “Effects of Demonetization on Retail Outlets” by Geeta
Rani, Associate Professor, B.P.S.M.V. KHANPUR (International
Journal of Applied Research 2016; ISSN Print: 2394-7500)
4. Research Paper titled “Impact of Demonetization in India” by M.
Angel Jasmine Shirley, M.C.A., M.Phil., M.Ed., (Ph.D.), Maharishi
University, Lucknow (International Journal of Trend in Research and
Development (IJTRD); ISSN: 2394-9333)
5. Research Paper titled “DEMONETIZATION AND ITS IMPACT ON
INDIAN ECONOMY” by SK Govil (Journal of Management Value &
Ethics, Jan-March 17; ISSN-2249-9512)
 Research Methodology

The key intention of this paper is to analyse the effect of cashless policy and
demonetization on small business in a sudden changed economic environment
in India, so this study is based on secondary sources of data and questionnaire.
Secondary data have been collected from different published sources such as
magazines, journals, newspapers, and relevant website which have been
consulted in order to conceptualise cashless economy and demonetization and
its impact on MSME segment. Descriptive statistics has been used in the
analysis.

This study was carried out to determine whether demonetisation had a negative
impact on SMEs and whether this move by the current government
inadvertently led to greater digitalisation. The study was undertaken by holding
structured interviews with the owners of various SMEs through questionnaire.

 Research Objectives

 To understand the concept of cashless economy and its evolution.

 To examine India’s, move towards a cashless economy initiated by

demonetisation

 To determine possible implications of a cashless economy on MSMEs in

India and point out challenges its implication.
 Research Limitations

Research limitations in a typical dissertation may relate to the

following points:
 

1. Formulation of research aims and objectives :-

We might have formulated research aims and objectives too
broadly. We can specify in which ways the formulation of research aims
and objectives could be narrowed so that the level of focus of the study
could be increased.
 

2. Implementation of data collection method :-

Because We do not have an extensive experience in primary data
collection (otherwise you would not be reading this book), there is a great
chance that the nature of implementation of data collection method is
flawed.
 

3. Sample size :- 

Sample size depends on the nature of the research problem. If sample
size is too small, statistical tests would not be able to identify significant
relationships within data set. You can state that basing your study in
larger sample size could have generated more accurate results. The
importance of sample size is greater in quantitative studies compared to
qualitative studies.
 

4. Lack of previous studies in the research area :-

 Literature review is an important part of any research, because it
helps to identify the scope of works that have been done so far in research
 area. Literature review findings are used as the foundation for the
researcher to be built upon to achieve her research objectives.

However, there may be little, if any, prior research on your topic if you have
focused on the most contemporary and evolving research problem or too narrow
research problem. For example, if you have chosen to explore the role of
Bitcoins as the future currency, you may not be able to find tons of scholarly
paper addressing the research problem, because Bitcoins are only a recent
phenomenon.
 

5. Scope of discussions :-
You can include this point as a limitation of your research regardless
of the choice of the research area. Because (most likely) you don’t have
many years of experience of conducing researches and producing
academic papers of such a large size individually, the scope and depth of
discussions in your paper is compromised in many levels compared to the
works of experienced scholars.

THANK YOU.