Positive Impacts of Demonetization

Hailed as a bold move, demonetization was met with mixed reactions. Today, nearly five
and half years after this disruptive step, let’s take a look at the positive impacts of
demonetization on the economy.
1. The Move Towards A Digital Economy-Digital payments witnessed an exponential
growth up to 40–70% compared to the 20–50% 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.
2. Black Money Reduced Significantly - Post demonetization, 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.
3. Significant Boost To Financial Institutions- Post demonetization, 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-demonetization.
4. Deathblow To Shell Companies And Hawala Transaction - Post demonetization, the
government has shut down nearly 3 lac shell companies, which were siphoning black
money
5. Massive Shift In Investment Habits - For years, the primary method of savings for
Indians was to stockpile cash notes at home or use bank fixed deposits. Post
demonetization, millions of investors are looking for alternative investment choices.
This has led to a massive spike in the popularity of equities and mutual funds.
There’s no arguing the fact that demonetization is a reform of huge magnitude. And, it’s
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.