Preliminary Effect of Demonetization on Financial Inclusion in India | Original Article

ABSTRACT:

Financial inclusion aims to take banking services to the doorstep of everyone to meet their entire savings, credit and remittance facilities. When the poor have access to credit and savings facilities, so they can grow larger businesses, manage consumption and household expenses better and plan for shocks. Their standard of living improves and poverty falls which allowing people to contribute more to the economy as well. Indian government adopted demonetization in November 2016, to tackle with black money and make India a cashless digital economy. This paper is descriptive in nature. The objective of the paper is to examine both positive and negative effects of demonetization on financial inclusion. The positive effects of demonetization include operationalising of Jan Dhan Yojna accounts, making India a cashless digital economy, improving account usage and saving behavior of individuals and contributing to wealth of nation through conversion of dead capital into live capital whereas the negative effects of demonetization include the adverse effect on ordinary individual, rural population, women, informal sector and NBFC-MFIs. The findings concluded that demonetization has turned out to be positive for financial inclusion, but negative for common man, rural population, informal sector, women in low income groups and NBFC-MFIs.