EFFECTS OF DEMONETIZATION ON COMMON PEOPLE AND

STUDENTS

RAHID ARZOO CHOUDHURY – 19121017

MBA – A (FINANCE)
INTRODUCTION

Demonetization is withdrawal of any currency from circulation. It occurs whenever there is a change of
national currency..
Contrary to demonetization is 'Remonetization', within which a form of payment is restored as legal medium
of exchange.
There are many reasons why a Nation demonetize their currency-
 To combat inflation.
 To combat corruption and tax evasion.
 To remove black economy.
 To discourage a cash dependent economy.
 In November 8th, 2016, the Indian Government decided to demonetize the Rs 500 and Rs 1000 notes, the two
biggest denominations in its currency system, these notes accounted for 86% of the country’s circulating cash.

With little warning, Indian Prime Minister ‘Narendra Modi’ announced to the citizen on November 8 th, that
these notes were worthless, and they had until the end of the year to deposit or exchange the notes with newly
introduced Rs 500 and Rs 2000 notes.

Chaos ensued in the cash dependent economy, as long lines formed outside banks and ATMs, which had to
shut down for a day. Only 60% of the country’s 200000 ATMs were operational. The Government’s restriction on
daily withdrawal amounts added to the misery of the common people.
RESEARCH OBJECTIVES:

The Objectives of the study, “Effects of Demonetization on the common people and students” are as follows-

Primary Objectives-
 To study the social impacts of the demonetization.
 To Study about the problems faced by the common people and student.
 To study about the opinions of people on implementation of demonetization.

Secondary Objectives-
 To analyze the future impact of demonetization on the economy.
 To analyze the student’s perception regarding demonetization.
REVIEW OF LITERATURE:

 Former PM of India, Dr. Manmohan Singh, who is also a noted economist said that Prime Minister “Narendra
Modi claim of robust economy is ‘Hollow’. The demonetization move was disastrous and it hurted the country
and the worst are yet to come”.

 Dr. Farhat Mohsin and Stuti Sahni (2017), “Demonetization : A Ripple Effect on Indian Economy” mentioned
that The Indian economy is experiencing a shock, because of a major decision taken by present government and
country is accepting digital payment.

 Rahul Prakesh Deodhar (2016), “Black money and demonetization”, The Government of India announced that
the Rs 500 and Rs 1000 denominations will cease to be legal tender. The move was targeted towards tackling
black money, corruption and terrorism. After initial stage, questions began to emerge, what are the cost of
demonetization? The author concluded that it is just one move of one piece in the chess board of black money.
To checkmate the black money king, you must win the board.
RESEARCH METHODOLOGY:

• Research Methodology is the systematic, theoretical analysis of the method applied to a field of study. It
comprises of the theoretical analysis of the body of the methods and principles related to with branch of
knowledge. Methodology doesn’t provide any solution. It helps in understanding which method, set of methods
or practices can be applied to calculate specific results.

• The data collection method used in this research i,e ‘Effect of demonetization on common people and student” is
Questionnaire. A questionnaire consisting of a series of questions for the purpose of gathering information from
respondents.

• The questionnaire was circulated in form of Google Forms which is very convenient to collect data and easily
reachable to the targeted populations.
The primary data was collected through-
 Questionnaire
 Observation
 Interviews
 Case study

The Secondary data used in this research were collected from –

 Internet
 Government Publications
 Magazines
 Journals
  
RESULTS AND FINDINGS:
DO YOU HAVE BANK ACCOUNT?
No Yes

1%

It appears from the above data that has been collected

through survey, 99% of the respondents have bank
accounts and 1% of the respondent don’t have or possess
a bank account.

FIGURE 1.3
99%
DID YOU USE INTERNET BANKING, PAYTM OR ANY MOBILE WALLET
BEFORE DEMONETIZATION?

Responses
60

50 51
From the above figure, we can see that 60% of the
40
respondents were using Internet banking, Paytm or
No any other mobile wallet before demonetization. And
remaining 40% started to use after the implementation
34 Yes
30

of demonetization.
20

10

0
No Yes
HOW WOULD YOU RATE THE METHOD IN WHICH DEMONETIZATION
WAS IMPLEMENTED?

24

1
2
3
The data collected from respondents, it can be clearly
4
5
observed that majority of the respondents did not liked
13 6
7
the method in which demonetization was implemented.
8
9
9
8 8
10
7 7

4
3
2

1 2 3 4 5 6 7 8 9 10
DO YOU THINK DEMONETIZATION HAS PROVEN BENEFICIAL TO
THE COMMON PEOPLE?
Can't say No Yes
70
66

60

50
From the above figure, it can be clearly seen that 78% of
the respondents think that demonetization has not been
40 beneficial to the common people and only 9% of the
respondents think that demonetization has been beneficial
30
for the common people.
20

11
10 8

0
Can't say No Yes
WERE YOU SATISFIED BY THE WAY IN WHICH BANKING SECTOR
HANDLED DEMONETIZATION?

49

From the above figure, we can see that 49 respondents i,e

No Opinion
58% were unsatisfied by the way in which banking sector
Satisfied
Unsatisfied
handled demonetization during the initial phase.
Very Satisfied

18
17

No Opinion S a t i s fi e d U n s a t i s fi e d V e r y S a t i s fi e d
DO YOU THINK THE GOVERNMENT DECISION OF BANNING RS 500
AND RS 1000 NOTE WILL REDUCE BLACK MONEY?

64

Out of the data collected from the respondents, we can

see that 75% of the respondents think that the
Maybe
No
government decision of banning Rs 500 and Rs 1000
Yes
note will not reduce black money in the economy.

11
10

M ayb e No Y es
IS IT A SAFE TO ENCOURAGE DIGITAL TRANSACTION IN MODERN
ERA?

Maybe
25%

As per the respondent’s response, it can be clearly seen

that 58% of the respondents thinks that it is safe to
Maybe
No
encourage digital transaction in modern era as more and
Yes
more are preferring digital payment.
Yes
58%

No
18%
WHICH AREA ACCORDING TO YOU HAS BEEN AFFECTED THE
MOST?
43

From the above data collected from respondents we can

clearly observe that majority of the respondents think that
Rural area has been affected the most by the

20
demonetization.
13
9

Rur a l S e m i- Rur a l S em i- Ur ba n Ur ba n

Rural Semi-Rural Semi-Urban Urban

WAS IT CAUSING DIFFICULTY TO STAND IN QUEUES AT ATMS AND
BANKS?

Yes 81

From the above figure, we can see that 81 respondents i,e

95% found it difficult to stand in queues at ATMs and
Total banks as they had to wait for long time to get cash.

No 4

0 10 20 30 40 50 60 70 80 90
HOW MUCH TIME YOU REQUIRED TO WITHDRAW OR EXCHANGE
MONEY DURING THE TIME OF DEMONETIZATION?

0-1 Hour
14%

It appears from the above figure that 14% of the

respondents had to wait for around 0-1 hour, 41% of the
3+ Hours
45%
respondents had to wait for around 1-2 hours and 45% of
the respondents had to wait for around 3+ hours to
withdraw or exchange money during the time of
demonetization.
1-2 Hours
41%
 HAVE YOU FACED ANY DIFFICULTY IN USING THE RS 2000 NOTE IN
THE MARKET INITIALLY?

80
74
70

60
It appears from the above figure that almost all
respondents surveyed find it difficulty using Rs 2000
50
note in the market initially. Out of the total respondents
Total
40
13% respondents did not find any difficulty in using Rs
30 2000 note in the market initially.
20
11
10

0
No Yes
WHAT DO YOU THINK OF RS 2500 PER DAY WITHDRAWAL LIMIT
FROM ATM MACHINE AT THAT PERIOD?

68

From the above data collected from respondents we can

Limit was fine
Should be higher
clearly observe that majority of the respondents think that per
Should be lower day withdrawal limit should have been higher than Rs 2500
from ATM during the period of demonetization.

14

L i m i t w a s fi n e S h o u l d b e h i g h er S h o u l d b e l o w er
WHAT DO YOU THINK WHICH CLASS OF PEOPLE EFFECTED THE
MOST BY THE GOVERNMENT DECISIONS?

Middle Class Poor Class Rich Class

Rich Class 5

From the above figure we can observe that 70% of the

Poor Class 21 respondents thinks that the middle-class people were the
most effected by the government decision of demonetization.

Middle Class 59
WILL THE DEMONETIZATION REDUCE CORRUPTION?

64

From the data, it is clearly observed that 75% of

respondents think that demonetization will not reduce
corruption, 19% of the respondents thinks
demonetization may reduce corruption and 6%
respondents think that demonetization will reduce
16
corruption.
5

M ayb e No Y es
 WHAT IS YOUR EXPERIENCE ON DEMONETIZATION AS A POLICY?

37 37

It appears from the above figure and data collected from

the respondents that 44% of the respondents think it was
a bad experience, 44% of the respondents also think that
it could have been improved, 5% of the respondents think
it was a good experience and remaining 7% are neutral.
6
5

B ad E x p er i en c e Can 't S ay Co u l d Have I mp r o ved Go o d E x p er i en c e

FINDINGS:

 The demonetization scheme by the Indian Government indicates a strong resolve to fight black money,
corruption and parallel economy.
 Many people were being deprived of their money and suffered a lot of inconvenience to get back their own
money.
 Standing in the queues for a day means loss of day’s earning for the middle class and poor class people.
 The time required to exchange old notes was very frustrating. Sometimes even banks ran out of the new notes,
and students had to visit again and stand in queues.
 Many small business and traders also faced many inconveniences. They have all suffered a sharp dIp in their
respective business.
 The senior citizen was also affected by the demonetization as they had to stand hours in the queues to exchange
money at banks.
SUGGESTIONS:

 Government should have printed more and smaller denomination such as Rs 50 and Rs 100 notes so there should
be enough circulation of money in the market.
 Government needs to ensure that the enough quantity of money is being transported to the banks and ATMs in
both rural and urban area’s on time.
 There is a need of setting up of digital outside banks majorly in rural regions for spreading digital literacy across
all sections of the nations.
 All ATMs should have both withdrawal and deposit facilities.
 Educate everyone about the use of mobile e-wallet and card facilities.
 Every shop should be equipped with swipe machines. And
 Banks should reduce the minimum balance norms.
CONCLUSION:

Demonetization in India is a great effort taken by Indian government to combat with black money, corruption
and parallel economy. It was a bold decision taken by government. The main purpose of demonetization is
removing the black money and reducing the corruption.

Demonetization has created so many problems for the citizens of India. They faced many problems while
exchanging, withdrawal of money from banks and ATMs. And faced problem of less consumption of goods due to
lack of cash. Business sectors was also disrupted due to lack of cash. But government has given so many remedies
to the citizen of India from time to time.

Some economist said that the positives impact of demonetization will show in future. The future beholds the
overall impact of demonetization.