All kinds of claims and claims have been made by the Opposition and Opposition about the demonetization in the year 2016, whether the country has gained or lost. The Opposition has been consistently saying that the country has suffered due to demonetization and no benefit has been seen so far. Now in a study conducted by researchers from Harvard and IMF, it has been claimed that India’s economic activity declined by at least 2.2 percent and jobs by 2 to 3 per cent only in the demonetization quarter, which led to GDP up to 2 percent.
Significantly, on November 8, 2016, Prime Minister Narendra Modi announced that from midnight on the same day, 500 and 1000 rupee notes will not be legal tender, that is, their practice will stop. Due to this, 75 percent of the cash from the entire system had become illegal overnight. After this there was a huge cash crunch in the country. However, there has been a dispute about whether this has damaged the country’s economy or not. Now researchers from Harvard University and International Monetary Fund (IMF) of the US have claimed that in the fortnight of demonetization, India’s economic growth had slowed down and this led to a decrease of 2 to 3 percent in jobs.
The study said that the most severe decrease in ATM withdrawals was seen in the Indian districts which suffered the most from demonetization and this shows how the impact of demonetization was on the Indian economy.
However, it has also been accepted in the study that the use of digital or alternative means of payment such as mobile wallet has increased after demonetisation. These things have come to light in this study, titled ‘Cash and the Economy: Evidence from India’s Demonetization’. Writing this paper includes Gabriel Chhodoro-Reich, Associate Professor of Economics at Harvard University, Director and Economic Counselor of the Research Department of the IMF, Geeta Gopinath, Prachi Mishra of Goldman Sachs, and Abhinav Narayan of the Reserve Bank. In this study, the impact of demonetisation has been assessed to all sections in Indian districts.
The study said that during November and December 2016, during the demonetisation, there was a decline of 2.2 percent in economic activities. As a result of all this, there was a decline of at least 2 percent in quarterly growth.
According to the study, due to demonetisation, there was a decrease of about 2 per cent in the debt flow in the fourth quarter of 2016. Talking about the poor implementation of demonetisation, the report said, “Both the Reserve Bank and the government exercised considerable secrecy before this policy announcement and the Reserve Bank has printed and distributed large notes on a large scale before the announcement. Did not work Due to this there was a huge shortage of immediate cash. Due to the printing press being its limit, the government could not replace the note that was removed, which caused overnight 75% of the currency to disappear overnight and it took several months to improve it.