Demonetization, the Cash Shortage and the Black Money

Ashok K. Lahiri

Working Papers from eSocialSciences

Abstract: Demonetisation of INR 500 and INR 1,000 notes in India on November 8, 2016 is different from many other countries’ scrapping of high value notes in two respects – the withdrawal of their legal tender status and continuation with INR 1,000 and INR 2,000 notes. It has resulted in a cash shortage. Non-cash medium of payments may be encouraged by this shortage, but, with supplies only from the domestic currency presses, the shortage is unlikely to disappear by the end of 2016. Import of currency printed abroad may provide a solution for ending it sooner. The impact of the shortage, if it continues, will be fully felt in the last quarter of 2016-17. Its growth impact in 2016-17 is 0.7-1.3 per cent depending on how much shortage continues and for how long. [NIPFP Working Paper No. 184].

Keywords: demonitization; cash shortage; black money; growth impact; currency; solution; import; non-cash medium; legal tender; payments; promissory notes; demonetisation; tax returns; bank; foreign currency crisis; debit; credit cards (search for similar items in EconPapers)
Date: 2017-01
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.esocialsciences.org/Download/repecDownl ... AId=11550&fref=repec

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ess:wpaper:id:11550

Access Statistics for this paper

More papers in Working Papers from eSocialSciences
Bibliographic data for series maintained by Padma Prakash ().