Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Impact of Demonetization on Rs 500 and Rs 1000 currency notes

1 min read

Demonetization refers to the process of withdrawing a particular currency from circulation and replacing it with a new currency. In India, demonetization refers to the decision taken by the government in 2016 to withdraw all 500 and 1,000 rupee notes from circulation and replace them with new 500 and 2,000 rupee notes.

The demonetization caused widespread disruption and chaos in India, as people rushed to exchange their old notes for new ones. There were long queues outside banks and ATMs, and many people were unable to access their money for several weeks. The demonetization also hit the informal sector of the economy, which relies heavily on cash transactions, and it led to a slowdown in economic growth.

Though Governments demonetization is a welcoming move to remove black money, fake currency, corruption, and terror financing from the system, it is a bit early to make any accurate predictions on the full impact of the government’s attempt to demonetize Rs.500 and Rs.1,000 currency notes. Demonetization is good for the medium to the long-term economy, however, it will adversely impact India’s economic growth in the short run.

Also, the cash conversion limit of Rs4000/day and ATM withdrawal of Rs2000/day would introduce short term cash crunch among the general public and could slow down consumer spending drastically. Now more people will move towards non-cash options like credit/debit cards and online payments.

demonetization

The impact of demonetization on the Indian economy and society was significant. Some of the key impacts of demonetization are as follows:

  1. Reduction in black money: One of the main aims of demonetization was to crack down on black money, or undeclared income that is not reported to the government. The demonetization helped to curb black money by making it harder for people to hold and use large amounts of undeclared cash.
  2. Increase in digital payments: The demonetization led to a surge in the use of digital payment methods, such as credit cards, debit cards, and e-wallets. This was seen as a positive development, as it helped to promote a cashless society and reduce the reliance on cash transactions.
  3. Slowdown in economic growth: The demonetization had a negative impact on the Indian economy, leading to a slowdown in economic growth. The disruption caused by the demonetization hit small businesses and the informal sector, which rely heavily on cash transactions.
  4. Disruption of daily life: The demonetization caused significant disruption to daily life in India, as people were unable to access their money for several weeks. There were long queues outside banks and ATMs, and many people were unable to pay for essential goods and services.

Overall, the impact of demonetization on India was mixed. While it helped to curb black money and increase the use of digital payments, it also caused significant disruption and had a negative impact on economic growth.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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