Demonetisation means discontinuity of the particular currency from circulation and replacing it with a new currency.
Following are the impacts of demonetisation on business and industry in India :
1. Digital transactions – The government succeeded in encouraging people to use digital means for making transactions. According to an estimate, Indian economy has witnessed close to 20% decline in currency in circulation.
2. Disruption of trade – Demonetisation created cash crunch due to inadequate supply of new notes. As a result, small businesses suffered financial losses. The situation was worse in rural areas due to lack of enough number of banks.
3. Decline in foreign investment – Demonetisation created insecurity in foreign investors to invest in Indian economy. Demonetisation created threat in the mind of Indian and foreign tourists which affected tourism. It resulted in adverse impact on GDP.
