The decision of the Indian government to demonetize their economy resulted in some serious consequences. Although, government officials said that the goals of demonetization were achieved the story was different.
What are the reasons behind failure of demonetization in India?
The failure was backed by different reasons mentioned below:
- The total number of 500 rupee notes in the economy at that time was 17165 million and the number of 1000 rupee notes was 6858 million. The total market value of these notes was 15.44 lakh crore. After the implementation of demonetization, the RBI said in June 2017 that people have deposited 15.28 crore (99% of total circulated currency) in the form of white money so government got only 16,000 crores as black money.
- Demonetization created chaos among people. due to demonetization, people had to wait in long queues in order to access transaction system. Even, several deaths were reported during the processes. People were given a time period of several weeks to exchange the banknotes.
- Additionally, India lost about 1.5% of its GDP in terms of growth; reported by the finance minister as he called it a “huge price” for the country.
- Due to the chaotic situation among people, the economy experienced a slowdown which made the situation worse for the economy of a country to stabilize itself immediately.