Page 1 of 7
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 13
December 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 287
Digital India after Demonetization
Ms. Supriya yadav
Assistant professor in commerce and management
SD College (Lahore)
Ambala cantt.
ABSTRACT
India has been always a nation in lanes-at ATMs and banks across the country- as it dodge towards
the 50- day time frame set by Prime Minister Narendra Modi when he promised return to regularity.”
Plastic is the new Khadi” is the currently popular saying broadcasted across social media. Since
November 8, every Indian has only one outlook: the perplexity of choosing a safe, secure, convenient
and cashless payment option. This article provide glance of adoption of digital mode of payment by
Indian citizens after demonetization.
Assistant Professor, Sanatan Dharma College (Lahore), Ambala Cantt.
WHAT IS DIGITAL INDIA
Digital India is a expedition launched by the
Government of India to make sure that
government services are provided to citizens
electronically by enhanced online
infrastructure and by broadening internet
connectivity or by forming the country
digitally chartered in the field of technology.
Inaugurated by Indian Prime Minister on 1 july
2015, the campaign includes 3 core
components, these are:
The creation of digital infrastructure
Delivery of services digitally
Digital literacy.
DEMONETISATION
Demonetization is the move of dismantling a
currency unit of its stature as legal tender. It is
all-important whenever there is a revision of
national currency. The old unit of currency
must be retreated and altered with a new
currency unit.
HISTORY OF DEMONETISATION IN INDIA
The Indian government had demonetised
bank notes on two prior instants—once in
1946 and then again in 1978—and in both
cases, the aim was to contend tax evasion by
"black money" kept outside the formal
economic system. In 1946, the pre- independence government hoped
demonetisation would castigate Indian
businesses that were falsifying the fortunes
amassed supplying the Allies in World War II.
In 1978, the Janata Party alliance government
demonetised banknotes of 1000, 5000 and
10000 rupees, again in the hopes of restricting
feigned money and black money.
2016 INDIAN BANKNOTE
DEMONETISATION
On 8 November 2016, the Indian government
announced the demonetisation of all ₹500
(US$7.40) and ₹1,000 (US$15) banknotes of
the Mahatma Gandhi Series. The government
argued that the action would abridge the
shadow economy and constrain on the use of
crooked and counterfeit cash to endow
illegitimate activity and terrorism. The sudden
announcement—and the protracted cash
scarcity in the weeks that followed—
developed significant turmoil throughout the
economy, frightening economic output. The
move was intensely disapproved as poorly
planned and unfair, and was met with
protests, litigation, and strikes.
Prime Minister of India announced the
demonetisation in an unscheduled live
televised address at 20:00 Indian Standard
Time (IST) on 8 November. In the
proclamation, Modi declared that utility of all
₹500 and ₹1000 banknotes of the Mahatma
Gandhi Series would be invalid past midnight,
and announced the circulation of new ₹500
Page 2 of 7
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 13
December 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 288
and ₹2000 banknotes of the Mahatma Gandhi
New Series in return for the old banknotes.
With restricted cash in hand and an immense
hardship in sight, most people are rushing to
cashless transactions. "Digital transactions
bring in better transparency, scalability and
accountability. The new move will compel
more merchants to accept digital money,"
says Abhay Doshi, Senior V-P & Head, Digital
Services Platform Business, Flytxt.
The RBI categorized every mode of cashless
fund transfer or transaction using cards or
mobile phones as 'prepaid payment
instrument'. These are:
Closed: circulated by an entity for buying
goods and services only from it, these don't
allow cash withdrawal or redemption. Ola
Money is one such closed wallet.
Semi-closed: These are used to purchase
goods and services, including financial
services, from merchants that have a specific
contract with the issuer. These too don't allow
cash withdrawal or redemption and include
wallets offered by service providers like
Paytm and State Bank Buddy.
Open: These can be used to purchase goods
and services, including fund transfers at
marketer locations, and also allow cash
withdrawals at ATMs. All Visa and Master- Card cards come under this category.
CASHLESS MODES
Mobile wallet: This is basically a digital wallet
available on the mobile phone. one can store
cash on the mobile to make online or offline
payments. So many service providers now a
days offer these wallets via mobile.
Plastic money: It includes credit, debit and
prepaid cards, which can be issued by banks
or non-banks and can be physical or virtual.
These can be bought and recharged online via
Net banking and can be used to make online
or point-of-sale purchases, even given as gift
cards.
Net banking: It do not include any wallet and
is mainly a method of online transfer of funds
from one bank account to another bank
account, credit card, or a third party. one can
do it through a computer or mobile phone.
Log in to its bank account on the internet and
transfer money via national electronic funds
transfer (NEFT), real-time gross settlement
(RTGS) or immediate payment service (IMPS),
all of which come at a nominal cost ranging
from Rs 5-55.
CASHLESS TRANSACTIONS USED IN INDIA
Transactions ECS NEFT NECS RECS IMPS
Introduced in 1990 2005 2008 2009 2010
Full name Electronic
clearing
system
National
electronic
fund transfer
National
electronic
clearing
service
Regional
electronic
clearing
system
Immediate
payment
service
Role To handle bulk
and repetitive
payment
requirements
To facilitate
near real- time fund
transfer
between
individual
accounts
To facilitate
multiple credit
to beneficiary
accounts
It’s a small
version of
NECS
It allowed
instant 24/7
interbank
fund transfer
through
internet,
mobile and
ATM at a very
low cost.
Page 3 of 7
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 03 Issue 13
December 2017
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 289
AFTER 50 DAY- THE RESULT OF
DEMONETIZATION
Modi’s demonetization tactic was a “shock
indoctrination” to disband the cash-centric
black market, to clean the country of
counterfeit notes, to further digitize the
economy, and to get more of the population
onto the formal, taxable economic grid.
Modi’s plan called for the canceled notes to
be replaced by new 500 and 2,000
denomination notes, but these were slow to
be circulated, and India— the most cash- dependent country in the world, suddenly
found itself without enough cash to run its
economy.
As the clock ticked down to midnight on
November 8th, a huge portion of Indian
society instantly found themselves stripped of
the ability to interact economically. Up to that
point, upwards of 95% of all transactions in
India were conducted in cash and 90% of
sellers didn’t have the means to accept
anything, But on top of this, 85% of workers
were paid exclusively in cash and almost half
of the population didn’t even have bank
accounts. Even Uber accepted cash payments.
The people of India were given 50 days to
redeem their canceled banknotes, after which
they would become as worthless as the paper
they’re printed on, which caused hundreds of
millions of people to rush to banks, jewelry
shops, foreign-exchange counters, and ATMs.
This redemption period for the old notes
came to an end on Friday December 30th —
and, surprisingly, nearly the entire stock of
500 and 1,000 rupee notes were recovered by
the central bank. But India’s demonetization
transition is far from being over. While the
currency supply is still not completely
restored and cash is still being rationed (there
are strict bank withdrawal limits of 24,000
rupees a week ($350) or 2,500 rupees ($36)
per day from ATMs), India is moving through
the demonetization transition.
The sudden demonetization was thrown upon
the public with following agendas.
To fight corruption
Initially, demonetization was sold by Modi as
a campaign to combat corruption. It was
thought that the country’s black market
wouldn’t be able to castle or deposit their
superfluity of illegitimately obtained wealth,
and the central bank could have been in for a
payday that was estimated to be as high as
$45 billion. But it did not happen. Even with
strict regulations put in place to audit large
deposits and limit the amount of banknotes
that could be exchanged at one time, India’s
gloomy economy was able to unload their
black money, often laundering it sparkling
white in the process.
How the black market was able to do this is
still being investigated, but reports have been
appearing that document an arrangements of
plans — which included everything from using
phony bank accounts to even threatening
bank employees with physical violence if they
don't do extra-curricular exchanges.
To curb counterfeiting
Another stated goal of Modi’s demonetization
campaign was to curb counterfeiting. It was
reported that prior to this initiative, 250 out
of every million Indian banknotes were fake
— the blame mostly being placed on Pakistan,
where there are rumored to be government- directed printing presses churning out Indian
rupees to fuel terrorism. The new 500 and
2,000 rupee banknotes which are currently
being issued have different designs and are of
different sizes than the previous notes, so all
old fakes were instantly washed from the
economy.
Initially, changing banknotes is of course an
effective means to combat counterfeiting, but
how long will this last? So many reports have
state that the newly constructed Indian
rupees will be anywhere from impossible to
rather easy to counterfeit.
