DEMONETIZATION AND ITS IMPACT ON INDIAN ECONOMY

India has carried out demonetizationexercises twice before, in 1946 and1978.In Jan 1978 episode, currency worthINR 1.46 bn (1.7% of total notes incirculation was demonetized. Of this INR 1.0 bn (or 68%) was tendered back.In 1978 the value of demonetizationwas very small (only 0.1% of GDP). However, the 2016 demonetization effort covers 86% of the total currencyin circulation (11% of GDP).On 8th November 2016 night at 8.15 P M Prime Minister of India Mr. Narendra Modi in his unscheduled television address to the nation announced that the currency notes of 500 and 1000 denomination will not be a legal tender money from midnight. Government took this step of demonetizing the currency as a tool to fight against black money and corruption in Indian Economy