Demonetization: Its socio-economic impact and reflections for further reforms Dr. Singla M. L. Associate Professor in Commerce, Maharaja Agrasen College, Jagadhri (Haryana) Online published on 12 May, 2017. Abstract On the evening of November 8, 2016, Prime Minister Narendra Modi has declared that Rs 500 and Rs 1, 000 currency notes would no longer be regarded as legal tender. India lost 86% of its monetary base as a result of this demonetization and in this single move, the Government has attempted to tackle all the three issues affecting the economy i.e. a parallel economy, counterfeit currency in circulation and terror financing. However, it is estimated that between 90 to 98 percent of all transactions in Indian economy simply runs on cash and almost one third of working capital in Indian business comes from black money. Thus, the “common man” is facing hardships in purchases of daily needs like food, medicine, bus and rail tickets, and so forth due to long queue & non availability of sufficient cash in banks. Hence, in the short run, there will be negative impact on the manufacturing sector and small scale businesses and in turn people particularly poor will be badly affected due to lose of their employment, and ultimately stagnant industrial growth. It is estimated that Indian black money in cash constitutes only 5 to 6 percent of India's illicit wealth on which taxes are not paid. The rich park illicit wealth in Indian and overseas real estate, shares, gold and overseas bank accounts so it is necessary to overcome such channels of investing illicit money through strict implementation of laws as well as introducing effective and safe digital system in the Indian Economy if government really wants to tackle the issue of corruption, black money, illegal funding of terrorism etc. The aim of this paper is to evaluate the socio economic impact of demonetization in India. The paper also focuses to examine lapse in the effective implementation of demonetization and the reflections for further reforms to get desired results. Top Keywords Demonetization, Corruption, Black Money, Economy, Reforms. Top |