Demonetization in India: A Catalyst for Cashless Economy

Abstract

The Government of India has implemented a major economic  decision of demonetizing high value currency notes of Rs. 500  and Rs. 1000. The rationale given behind this is that it would curb  black money and its flow as most of it would get invalidated. It  hasn't inconvenienced most people, especially those on the  wrong side of the socioeconomic and digital divide in India. Yet,  the exercise was neither a knee-jerk reaction nor was it without  consideration for the poor. But, between this the Government  again provided the scheme of pay tax and converts your black  money into white money scheme launched. Even if that does not  provide much comfort to those whose livelihoods have been  adversely affected, there is the argument that this temporary pain  is worth it to ensure the greater common gain of eliminating black  money. Modi and his cabinet ministers have now launched a  major social-media effort to promote cashless transactions,  which include e-banking, debit and credit cards, card-swipe or  point-of-sales (PoS) machines and digital wallets. This paper tries to explain the effect of such a move on the obtain  ability of credit, spending and extent of economic activities  particularly in India. The researcher also seeks to find out how  implications of demonetization will helpful to make a cashless  economy.