Term Paper - Group5 - Demonetization.pdf - Economics for...

Economics for Managers (Part II): Macro Economics
Term Paper on “Demonetization”
Submitted by Group 5:
Ravleen Kaur
Debashis Tarafder
Krishnajit Bhattacharyya
Pardha Sai Vangavolu
PGPX 2019-20
IIM Udaipur

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Contents
Table of Charts and Figures ...................................................................................................................... 2
Introduction ................................................................................................................................................. 3
Examples of demonetization in world economy ....................................................................................... 4
Examples of demonetization in Indian economy ...................................................................................... 4
Impact of Demonetization on Growth and GDP (G) ............................................................................... 5
Short term ................................................................................................................................................ 5
Long term ................................................................................................................................................ 5
Impact of Demonetization on Unemployment (U) ................................................................................... 6
Effects of Demonetization on Inflation and Interest rates (I) ................................................................. 6
Inflation .................................................................................................................................................... 6
Interest Rates ........................................................................................................................................... 9
Effects of Demonetization on Deficit & Debt (D) ................................................................................... 10
Effects of Demonetization on Exchange Rate (E) ................................................................................... 10
High inflation rate ................................................................................................................................. 10
Low inflation rate .................................................................................................................................. 10
Effects of Demonetization on Savings and Investment (S) .................................................................... 11
Impact of demonetization in different sectors ........................................................................................ 11
Banking sector ....................................................................................................................................... 11
Organized Manufacturing Sector ........................................................................................................ 12
Unorganized/ Informal Sector ............................................................................................................. 13
Aviation, Travel & Hospitality ............................................................................................................ 13
Impact of demonetization in cashless economy of India ........................................................................ 13
Conclusion ................................................................................................................................................. 14