Impact of Demonetization in India

Money is the most important part of every economy. Without money circulation in an economy world could not be developed in such a space. Over a period of time money helps to create a strong economy. Money is guaranteed by the Government of a country. In other words, monetization may be described as a process of giving guarantee to a particular form of the unit of money by the Government of a country. Unless and until a form of unit of money is recognized by a Government as money the same has no value whether it is in the form of paper or metal except the mere material value. On the other hand, demonetization is a process by which the Government of a country withdraws the backing or guarantee of one or more of its currency in circulation. This paper describes the history of demonetization in India. The latest demonetization in this country was announced on 8th November, 2016. In this paper an attempt has been made to discuss the reasons and the consequences of demonetization on some important economic factors.