INTRODUCTION

Following an announcement by Indian authorities on November 8th, 2016, the country's large
currency value notes were ordered to be transferred into banks by December 31st, 2016.
Demonetisation is the process of removing a currency's legal tender status. Demonetisation is
the process by which the present form of money is taken out of circulation and retired. It is a
phase of economic development during which a country's currency unit ceases to be legal
tender. Demonetisation is a process by which a government prohibits the use of specific
denominations of notes or coins.

On November 8, 2016, the Honourable Pm Narendra Modi ordered the withdrawal of the Rs
500 and Rs 1000 notes from circulation in India, which took effect immediately. The
government's primary goals in implementing the note ban are to eliminate counterfeit
currency, combat tax evasion, destroy black money and terrorist cash flows, and facilitate the
country's transition to a cashless economy. Citizens were immediately confronted with
significant cash shortages following demonetization. The new Rs. 500 and Rs. 2000 notes
were not produced as rapidly as citizens desired. On the day following the announcement, the
BSE SENSEX and NIFTY 50 stock indices plunged more than 6%. In the days following
demonetization, the country experienced significant cash shortages, which had a severe
negative impact on the economy as a whole. During the time  individuals with online
accounts, card transactions were able to resolve payment concerns through the use of these
mechanisms. They gradually began using mobile payment platforms (e-wallets) such as
Paytm, , MobiKwik, ICICI Pockets, SBI Buddy, Jio Money, and HDFC PayZapp to resolve
payment concerns.

The government's tax-to-GDP ratio increased considerably. Massive layoffs and deteriorating
economic morale meant that GDP growth would be significantly slowed. As per the majority
of estimates, demonetisation resulted in a nearly 2% decline in the country's GDP growth.
Demonetisation has resulted in a fall in the economy's real estate industry. This area has been
a significant contributor to the Indian economy's GDP growth. Demonetisation's full impact
will be felt in a few years, but it had a substantial immediate effect on the tax base and tax
collections, as well as resulting in a massive rise of digital transactions and the
standardisation of the economy. When it came to increasing the tax base, demonetisation had
a huge beneficial impact, bringing in 9.1 million new taxpayers in 2016-17 and 12.8 million
in 2017-18. This surge is largely due to demonetisation and the Income Tax Department's
post-demonetisation enforcement drive and Operation Clean Money.
 SIGNIFICANT EFFECT OF DEMONETISATION ON ADOPTION TO
DIGITALISATION

The ever-increasing customer demand for better and more affordable goods and services,
rapid delivery, and superior after-sales support, among other things, is a necessity. To meet
this need, each corporate entity must leverage digital technologies to enhance its overall
system. Digitalization is the process of transforming an entire firm into a digital environment
through innovation in areas such as productivity, packaging, and after-sales services. A
effectively workforce with the correct innovation choices will enable organisations to stay
competitive in this race. Consumers' need for self-gratification can be met through the
options afforded by digitization. India's government took the daring step of demonetization
on 8th November 2016 with a formal statement. A paperless economy enabled by digitization
was one of the primary goals of this initiative, along with combating black money, removing
corruption, destroying counterfeit currency, and halting terrorism financing. This
announcement resulted in the recall of higher value notes, namely Rs. 500 and Rs. 1000,
through deposit accounts or bank exchanges. The administration anticipates that this step will
contribute to broadening the tax base and accelerating the use of more advanced and faster
technologies.

Due to the paucity of currency following demonetization, digital payments have increased, as
has the use of digital platforms for buying and acquiring products and services in India. In the
long run, demonetization will have an effect on India's embrace of digitalization. There are
several obstacles to advancing the era of digitalisation, including the following:

• Convincing street vendors, kirana stores, and traders to conduct business using new and
existing modes of payment; and • Low literacy rates make financial inclusion difficult for the
majority of the population.

• In rural areas, unstable or non-existent internet infrastructure.

• Inadequate financial services for the poor and those who live in remote, tribal, and hilly
areas.

• Transactions are not available 24 hours a day, 7 days a week, or on holidays in some
situations.

• To alter people's perceptions of mobile commerce.

Although, after the demonetisation the Indian government has introduced new application or
modes for digitisation world.

• RTGS/NEFT/IMPS: These are available during banking hours and allow for real-time
transactions with a maximum payment limit of Rs 10 lakhs. With two factor authentication,
internet connectivity, an account number, and an IFSC are required.

• E-Wallets: They can be used 24 hours a day, seven days a week, with instant transactions
and a monthly maximum of Rs 2000 when paired with an internet-connected smartphone.
One must log in and make a payment.

• BHIM: It is a mobile application that enables fast and quick payment transactions via UPI.
It was launched by the National Payment Corporation of India (NPCI), the country's umbrella
organisation for all retail payments.

The government has taken numerous steps to accelerate digitization. The PMJDY (Pradhan
Mantri Jan Dhan Yojana) was established in 2014 and has resulted in the opening of 26.68
crore accounts.

With greater reliance on technology, the danger of fraud and invasion of personal accounts
cannot be discounted. Wiki leaks, hacking of US Democrat Hillary Clinton's emails, data
breaches at LinkedIn, and the theft of tens of thousands of people's credit/debit card
information have shattered the faith of IT experts and consumers alike, demonstrating that no
data base can be deemed secure. The government is aware of this issue and has made steps to
solve it by establishing a distinct division for digital payments in India's Computer
Emergency Response Team (CERT-In). Additionally, cyber security auditors are being
appointed. A new technology centre Botnet is being built to automatically eradicate malware
from any system infected with it. Additionally, IT law is being thoroughly examined for
reinforcement and tighter regulation in light of the growth of digital payments.

Many businesses have been affected by the partial or entire cessation of economic activity as
a result of the Covid-19-related restrictions. Revenue loss has been the most detrimental to
enterprises. They resumed operations following the relaxation of limitations. Due to the
constraints and concern of disease spread, many firms have been forced to adopt or modify
digital methods of conducting business. Changes in the business environment, particularly in
terms of digital transformation, will aid enterprises in combating the consequences of Covid-
19. Since the outbreak of Covid-19, there has been a spike in company digital transformation.
The change to a digital environment following demonetization must be viewed as having
both positive and bad consequences. However, all of these demonetization, GST, and
pandemic effects have been incorporated into the digital world.

Demonetization has impacted and also brought about a few significant changes in the nation's
economy and in the way people transact. It has had an effect on the economy and has aided in
the establishment of the cashless economy. Additionally, it compelled people to learn and
adapt to new technology for everyday use. This has had a significant influence on reducing
the use of liquid cash and increasing the use of safer ways of transaction. As a result,
demonetization is neither a scourge nor a blessing for the people or the economy.