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Note ban will have positive impact in

APR 17, 2017

Prof. Ketan Veera
Presentation Prepare by : (201652) Prathamesh Kadu

 Demonetisation caused an immediate cash
crunch, hurting economic growth, World Bank

 Note ban could accelerate financial
deepening, foster financial inclusion, and
increase transparency, the bank added

 Temporary setbacks notwithstanding, note ban will have a positive
development impact in the long term as it accelerates financial deepening,
foster financial inclusion and increase transparency, the World Bank has said.

 In a report titled 'South Asia Economic Focus - Globalisation Backlash', it said
eliminating tax evasion and corruption -- the most talked objectives of junking
old 500 and 1000 rupee notes -- is "typically a demanding process involving
multiple measures overtime.“
 Demonetisation caused an immediate cash crunch, hurting economic growth,
it said.

 In November last year, the government withdrew from circulation 86 per cent
of the currency and gradually replaced them with new 500 and 2000 rupee
notes, making demonetisation a massive currency exchange.

 "The most prominent reasons brought forward for this far- reaching move
were to curb black money, to eliminate counterfeit notes, and to promote the
use of electronic payments," the report said.

 Eliminating tax evasion and corruption is typically a demanding process,
involving multiple measures over time, it said.

 "However, demonetisation could accelerate financial deepening, foster
financial inclusion, and increase transparency, thereby having a positive
development impact in the longer term," it said.
 But for this to happen, there should be a large and durable shift from cash to
electronic payment methods.

 World Bank said the changes in the use of specific digital payment tools over
the last few months suggest that a permanent change might have taken place.
 Use of debit and credit cards at points of sale increased from Rs 52,000 crore
to Rs 82,000 crore. The total value of transactions relying on prepaid
instruments, including mobile wallets, doubled between November 2016 and
January 2017. "The coming months will tell whether these changes are here
to stay.“

 World Bank said before demonetisation India relied on cash to a greater
extent than other large emerging markets.
 However, "the progress made on JAM, the innovative drive to link bank
accounts, mobile phone numbers and biometric identification cards, had
taken the country to the cusp of a technological transformation," the report

 Most adults in India have an Aadhaar card (the A in JAM) and a mobile
phone (the M). But, the bank account side (Jan- Dhan Yojana, the J) was
more limited as not every household had a bank account, and many of
existing accounts were inactive.

 "The hardship created by demonetisation could have given the impetus for
households to open and use bank accounts, and for IT companies to swiftly
deploy digital payments technology," it said.

We have taken efforts in this project. However, it would not have been possible
without the kind support and help of many individuals and Collage. We would like
to extend my sincere thanks to all of them.

We are highly indebted to Prof. Ketan Veera for their guidance and constant
supervision as well as for providing necessary information regarding the project.

Our many thanks and appreciations also go to our colleague in developing the
project and people who have willingly helped us out with their abilities