A Study on

IMPACTS OF DEMONETIZATION

undertaken at

CHENNAI BUSINESS SCHOOL

Project Report

Submitted in partial fulfillment of the requirement

For the award of the degree

POST GRADUATE PROGRAM IN MANAGEMENT

By

CHARISHMA P

KARTHICK

PRATIK BAL KRISHAN

PRATHIKSHA

SARATH KRISHNA

Under the guidance of

Prof. Aravind Narasipur

CBS House No 31, Dr. Radhakrishnan Salai, 9th Lane,

Mylapore, Chennai, Tamil Nadu 600004

1
 DECLARATION
Charishma P, Karthik, Pundit Pratik Bal Krishan Sharma, Prathiksha, Sarath Krishna are
bonafide students of the department of Chennai Business School, would like to declare that this
project done on the Impacts of Demonetization of Rs 500 and Rs 1000 is for fulfillment of the
Post Graduate Program in Management of Chennai Business School and is original work.

DATE: Prof. Aravind Narasipur

PLACE:
Project Guide
Signature:
Post Graduate Program Management

CBS House No 31, Dr. Radhakrishnan

Salai, 9th Lane,

Mylapore, Chennai, Tamil Nadu 600004

2
 ACKNOWLEDGEMENT

We express our heartfelt to Mr. Amrolia CEO of Chennai Business School and Chairman of the
HR department, who has shared all his practical knowledge in the field of HR and transferred the
same to us.

Our sincere thanks to Prof. Sridar Natarajan, Dean, Chennai Business School for this
opportunity and providing his valuable guidance and constant support. We are very grateful to all
our friends for offering their help and valuable time whenever required. Finally, its our foremost
duty to thank all our respondents who helped us complete the survey without which the research
work would not have been possible.

My special thanks to Prof. Aravind Narasipur, who has helped and guided us at each and every
stage of our research work.

3
 CONTENT

S NO. TITLE PAGE NO.

1 Introduction 4

2 Review of literature 6

3 Executive Summary 8

4 Problem definition 9

5 Scope of the study 10

6 Research Methodology 10

7 Focus Group 11

8 Questionnaire Development 11

9 Pilot study 11

10 Scaling techniques 12

11 Sampling Techniques 12

12 Data Analysis 12

13 Graphs & Charts 19

14 Residual Plots 25

15 Findings 26

16 Recommendations 26

17 Conclusion 27

18 Bibliography 27

19 Annexure 27

4
 INTRODUCTION
Recently Indian government has demonetized the high value currencies i.e. currency notes of
Rs500 and Rs1000 with objective to unearth the black money, and to curb the corruption,
counterfeit currency as well as terror financing. This decision was considered as biggest
cleanliness drive against the black money in the history of Indian economy. But there is various
view of experts on demonetization, as some argues that it will hit the black money and other
argued in negative.

How it will curb black money-

In India all sections of the society are accustomed to use cash transactions, and this habit is
unscrupulously misused by some bad elements of the society. Such habit resulted in even people
with accounted money are started using cash transaction for high value transactions. It is resulted
into parallel economy with unaccounted money, even much stronger than regular economy. The
parallel economy black money, corruption, counterfeit currency and terror financing. These
issues hampered growth and development of the economy. In this background demonetization of
Rs500 and Rs1000 currency notes as a master stroke, as the move will address issues like black
money and corruption and also help the economy become more digital. The move will either
unearth the black money slashed in the form of cash or forces to destroy those unaccounted
currencies. Demonetization will curb the menace of black money and will help check stashing of
funds to a large extent. Similarly, it has major impact on corruption that exists in India and also
on financing of terror activities in India. Hence it was considered as courageous step in the fight
against unaccounted money.

Some argues against of it-

Currently high-value currency notes accounts for the value of 86% of the notes in circulation in
India. According to some estimates the size of the black economy in India range from 20% to
60% of GDP and more and the currency in circulation is just 12% of GDP. Even if more than
50% of money in circulation is black money, but most of it will find its way back to the banking
system one way or another, and be recycled as new notes. According to some experts, the black
money holders, tax evaders and corrupt official may not slash this money in cash in their homes
due to sheer scale of logistics. Generally, many viewed that tax evaded income mostly invested
in companies, real estate and these people may not be affected due to demonetization.

Hence these experts argue that, demonetization may not yield desired results against black
money, rather it creates inconvenience to the general people.

5
 REVIEW OF LITERATURE
By Padmapriya Govindarajan
November 18, 2016

On November 8, Indian Prime Minister Narendra Modi announced the surprise demonetization
of the Rs500 and Rs1000 notes of Indian currency. Less than two weeks since the DE
recognition of these notes as legal tender, the country is in an uproar. While this is not the first
time that India has attempted to demonetize in a professed bid to tackle the issue of black money
in the country, unlike the last time under Prime Minister Moraji Desai in 1978, this time the
Reserve Bank of Indias governor Urjit Patel is in full support of the decision and has called it a
bold move that addresses the growing menace of fake Indian currency notes.

However, opinion on this decision is very far from a consensus in both the expert and the non-
expert realm. The first question raised against this move is the significance of cash as a
component of the money laundering networks in India. Economists have argued that this move
has left the biggest chunk of black money untouched the stacks that lie in undisclosed accounts
in Swiss Banks.

While former RBI governor Raghuram Rajan has not made an official statement regarding this
move, he has expressed reservations in the past about the effectiveness of demonetization as a
means of tackling money laundering, possibly indicating that he too might be in this camp of
skeptics. The IMF has made a statement supporting Modis efforts, but has also very clearly
indicated the need for prudence in managing the transition to new notes, given the pervasiveness
and importance of cash to the economy.

The chief ministers of the states of Bihar, Andhra Pradesh, Odisha, and Telangana have openly
expressed both support and appreciation for this move in the long run, while the chief ministers
of Uttar Pradesh, Karnataka, Maharashtra, and West Bengal have expressed varying degrees of
criticism and worry at the potentially very harmful short term impacts. Members of the Congress
and the Samajwadi Party have violently opposed this move as well.

New Delhis Chief Minister Arvind Kejriwal has been vocally critical of the demonetization,
stating that the experts he has consulted have not indicated much confidence in this move as a
means of getting rid of black money. Drawing upon his own election promises to weed out
corruption, he has in fact accused the government of having strategically informed its friends and
allies (who might have hoarded black money) in advance thus effectively only complicating
the life of the common man with this move. BJP President Amit Shah has retorted, asking for
skeptics to provide concrete reasons for their opposition, and implied that only anti-social
elements have a cause for worry as a result of this move.

6
The next question that may be raised is the preparedness of the government and the banks
regarding implementation of a move of this scale. The argument provided for why this move was
announced and administered overnight is that it denies hoarders of black money the chance to
dispose of it. While that may appear to be sound logic, it has also apparently impacted the
banking systems ability to ensure a smooth transition. Several ATMs across the nation continue
to be useless by virtue of not having enough fresh notes, while the ones that are refilled are
attacked by painfully long lines and eventually emptied at once.

Some leading Bank Unions have criticized the move as having been improperly planned
resulting in a severe shortage of Rs100 notes that in turn ensures that the large tender of the new
Rs2000 notes is rendered useless for routine everyday transactions. Rajya Sabha MP
Subramanian Swamy of the BJP has alluded to a lack of a proper contingency plan on the part of
the government. At an all-party meeting, the Lok Sabhas speaker said that the demonetization
had become chaotic due to implementation issues.

On November 15, the Supreme Court sat down to hear multiple petitions and four Public Interest
Litigations regarding this move some of which requested a complete rollback of this policy due
to its severe impact on everyday citizens. The court decided not to stay the decision right then
and instead will examine its legal validity before making a decision. After asking the government
to file an affidavit justifying its notification, the court adjourned the hearing to November 25.
Meanwhile, government authorities were also asked to ensure that the average citizen was not
deeply impacted by this policy.

This in turn is the third major question raised against this policy who is affected the most? The
removal of large sums of legal tender unquestionably affects all individuals who need to engage
in cash transactions in some form. Those with access to plastic money are less directly impacted
even in the short term, but in both the long and short term, specific sections have been
disproportionately hit. Disenfranchised groups who lack the access to ID documents are chief
among these.

The rural poor who lack the infrastructure to set up deposit accounts and who currently hold all
their money in cash form have been directly hit. Even those who do have access to accounts
among them struggle with ill prepared banks and post offices, small and dispersed in number,
and the need to take off several crucial hours from work sometimes in vain. It is also difficult
to estimate the numbers of women across the board who will be potentially irrecoverably
impacted by this policy women who do not inform their families of hidden stashes of cash,
who are otherwise fully dependent on male members of the family and who stand to lose years of
savings because they cannot confess to their presence.

7
Refugees who lack the requisite documents to create accounts are also now seeing months of
savings potentially vanish, as they still lack mechanisms to access the banking sector. Socially
hated communities who are again disproportionately cut off from the banking systems like
transgender communities and sex workers are other immediate victims. This is in addition to
the fact that reports indicate that the government may have over-estimated the existing levels of
connectivity to banking.

Modi, in a rousing rhetorically rich speech, requested the nation for 50 days to launch this self-
labeled war on black money. He asked the people to make short-term sacrifices in the interest of
long-term gains by virtue of all the money that will be seized from hoarders. Both the activist
and the non-activist sections of social media have equally raved about or ripped apart this
rhetoric. While it is too soon to declare whether the long-term gains are indeed forthcoming, the
short term sacrifices have been more than just significant. They have been immensely painful.

EXECUTIVE SUMMARY
This report says about the research project done on the study of Impacts of Demonetization of
Rs500 and Rs1000 among the residents of Chennai city undertaken at Chennai Business School.

OBJECTIVE: The objective of the study is to assess the problems faced by the people due to
demonetization and how have they reacted to it.

RESEARCH METHODOLOGY:

The data collection technique used is questionnaire, text book, Internet for review of
literature.
The sampling unit were students & professors of CBS and residents of Chennai.
The sample size is 75 respondents.
The sampling method used is Random sampling.

Approaches to the study: The approach we used in our study is descriptive approach. In this
approach, the problem is described by the researcher using questionnaire.

8
ANALYTICAL TOOLS: The tools which we used for our study are,

Regression: A measure of the relation between the mean value of one variable (e.g. overall
satisfaction) and corresponding values of other variables (e.g. Spending habit, Political,
Financial, Technology).
Chi Square distribution: It is the distribution of the sum of squared standard normal
deviates. The degrees of freedom of the distribution is equal to the number of standard
normal deviates being summed.

MAJOR FINDINGS: After conducting the survey we found that 53% of the respondents are
support the step taken by the government of India and 41.3% of the respondent feel that the
government could have implemented demonetization in a better way.

RECOMMENDATIONS: A exclusive consideration needs to be given for the business

community in India with a limit of 2 lakhs withdrawal to be permitted to keep up the economy
activities in line with the market progress. For lower class people daily wages earner, this currency
crunch should be delt at par on all the teller counters with a limit of Rs500 per day. This will give
much relief to the lower income group on this re-preposition of RBIs currency chest. The
government should also introduce lower currency notes immediately.

PROBLEM DEFINITION

We were asked to do a study to determine those dimensions that impact the people due to
demonetization of Rs500 and Rs1000. The following dimensions were chosen, based on a focus
group discussion:

1. Spending habits
2. Political
3. Financial
4. Technological.

The task was to determine which of the above dimensions impacts overall satisfaction of the
respondents.

9
 SCOPE OF THE STUDY
The scope of the study was to find out the Impacts of demonetization of the currency notes of
Rs500 & Rs1000. The main purpose of choosing this topic is to know how this step taken by the
Government has affected the people and the problems faced by them in their day to day lives
(Especially the ones who majorly depend on physical currency). Also to come up with solutions
or suggestions that help everyone to cope up with the problems faced and reduce its impacts.

RESEARCH METHODOLOGY

AREA OF STUDY: The area of our study is Chennai Business School, Mylapore.

PERIOD OF STUDY: The period of our study was fifteen days which took place in the third term
of our course in the month of November 2016.

OBJECTIVE:

The objective of our study is:

To assess the impacts of demonetization.

To understand the opinion about demonetization.

DATA TECHNIQUE:

PRIMARY DATA: The primary data we used for our study is Questionnaires.
SECONDARY DATA: The secondary data we used is Internet which was used to get
review of literature and text book.

APPROACHES TO THE STUDY:

The research design was descriptive in nature viz. a survey. The intention was to determine the
key determinants on the impacts of demonetization. This approach enables a researcher to explore
new ideas of investigation. A researcher develops his hypothesis based on his knowledge about
the subject matter of study. This helps him to define clearly the scope of his enquiry, the target
audience from whom the information is to be gathered, the time span available for conducting the
enquiry etc. As he goes into the field to collect the information the researcher will develop insights
into another aspect of the problem on hand thereby we will be able to widen the scope of his study.

10
SAMPLING:

Sampling basically means the process in which a specific number of elements from a population,
so that the study of sample and an understanding of its properties and characteristics would make
it possible to generalize such properties to the population elements.

SAMPLE DESIGN:

SAMPLE UNIT: The sample unit of our study were students & professors of CBS and
residents of Chennai.
SAMPLE SIZE: The sample size of our study is 75 respondents.
SAMPLING METHOD: The sampling method we used for our study is Random
sampling.

FOCUS GROUP
The topic has been discussed by eight participants out of which 5 were our team members and
the remaining three were our classmates. We had a discussion on the problems faced by the
people and the major sector effected due to demonetization. The focus group was conducted to
identify the four dimensions which was required for the survey. (The four dimensions are
mentioned in the problem definition)

QUESTIONNAIRE DEVELOPMENT

The questionnaire was adapted on effects of demonetization survey with appropriate modifications.
Once this was over, the key dimensions were identified based on a discussion during the focus group.
This was then modified based on a next round of discussion with a random sample of ten target
respondents. This step helped us ensure that we were focusing on relevant dimensions

PILOT STUDY

After the questionnaire was developed it was pretested with a random sample of the same 10
customers who helped us in the questionnaire design phase. A pilot study, pilot project or pilot
experiment is a small scale preliminary study conducted in order to evaluate feasibility, time,
cost, adverse events, and effect size (statistical variability) in an attempt to predict an appropriate
sample size and improve upon the study design prior to performance of a full-scale.

11
After conducting our pilot study, we found that there was a need to change modify our
questionnaire. Questions where changed to make them easily answerable by the respondent since
earlier the questions required more of thinking and knowledge and also where differing from our
topic of the study. We also got clarity over the topic and we modified it according to our study.
SCALING TECHNIQUES
For the core of the questionnaire, we used a 7-point interval scale with 1 denoting as Strongly
Disagree and 7 denoting as Strongly Agree. The other sections of the questionnaire had the
appropriate scaling depending on the data required. Please refer to the questionnaire in the
section titled Exhibits at the end of this report.

SAMPLING TECHNIQUES
We decided to target a total of 75 respondents which would ensure at least 18 observations per each
dimension. This was necessary to ensure a reasonably high degrees of freedom for the regression
model. Also, we kept a margin to allow for some data that would need to be discarded due to
incompleteness. The 15 respondents that each of us was assigned, were chosen randomly.

DATA ANALYSIS
After completion of data gathering based on the questionnaire, all the relevant data was entered
into an Excel file. For each respondent, we arrived at an average score for each dimension based
on the responses for the questions within that dimension. Similar average scores were obtained
for the other three dimensions. These four values comprised the observations for the four
independent variables for a particular respondent. The rating given by the respondent for his/her
overall satisfaction level (the last question in Section 4 of the questionnaire) was the Y value. So,
for each respondent we had four values for the four independent variables (four dimensions in the
questionnaire), and one value for the dependent variable (the overall satisfaction score). So, the
multiple regression model had four independent variables, one dependent variable, and 75
observations. We analyzed this model using the regression feature of Excel.

12
RESULTS

A) STATSTICAL OUTPUT

SUMMARY
OUTPUT

Regression Statistics
Multiple R 0.898875529
R Square 0.807977216
Adjusted R
Square 0.797004486
Standard
Error 0.452817576
Observations 75

ANOVA
Significance
df SS MS F F
Regression 4 60.39360366 15.09840091 73.63502 2.42E-24
Residual 70 14.35306301 0.205043757
Total 74 74.74666667

Standard Upper Lower Upper

Coefficients Error t Stat P-value Lower 95% 95% 99.0% 99.0%
Intercept -0.36095619 0.325426178 -1.10917995 0.271149 -1.01 0.288086 -1.22265 0.500741
Spending
habits 0.261203501 0.049642254 5.261717204 1.49E-06 0.162195 0.360212 0.129756 0.392651
Political 0.215819726 0.052567305 4.105588593 0.000108 0.110978 0.320662 0.076627 0.355013
Financial 0.235990528 0.061435651 3.841263589 0.000266 0.113461 0.35852 0.073315 0.398666
technological 0.365177132 0.044521015 8.202354217 7.74E-12 0.276383 0.453971 0.24729 0.483065

The key findings from the regression analysis were as follows:

Significance F is 2.42E-24 which denotes a highly significant model
R-squared of 80%
Adjusted R-squared of 79.7%
No problem of multi-collinearity between the independent variables
Spending habits, political, financial and technological factors (all of them) were found to be
highly significant with p-values of 1.49E-06, 0.000108, 0.000266 and 7.74E-12respectively at
99% significance level but the spending habits factor is the most relevant as it has the lowest
p value.

13
 The residual plots of all the four independent variables is random and shows no specific
pattern.
Regression Equation: Overall Satisfaction = -0.36095619 + 0.261203501 x Spending habits +
0.215819726 x Political + 0.235990528 x Financial + 0.365177132 x technological.
A point estimate of the overall satisfaction score is 53% because 53% of the respondents have
rated the overall satisfaction from 5 to 7.
A 90% confidence interval for the proportion of satisfied customers is [46%, 62%] (Note: np
and nq> = 5)

About 44% of the respondents have chosen multiple options while using debit cards. About 41%
of the respondents prefer to pay in cash. About 73% of the respondents go to bank only when a
situation arises.

As regards the demographic profile of the respondents, the data reveals the following:

95% of the respondents are graduates and above.

71% of the respondents earn less than Rs. 25,000 per month
79% of the respondents are less than 30 years of age
52% of the respondents were male.

LIMITATIONS AND CAVEATS

The project had the following limitations:

Sample size was limited due to time constraints

The study was restricted to online survey.
Family and friends of the members were the respondents for this survey.
95% of the respondents were graduates.

CONCLUSIONS AND RECOMMENDATIONS ON THE REGRESSION ANALYSIS

In general terms, all the factors were responsible in concluding that these factors have impacted
common mans life due to demonetization. The study on demonetization needs to be done on
various income groups and understand how the life of various income groups have been affected
by demonetization as understanding the effects of demonetization in a vast and diverse country
like India requires a larger sample size as compared to homogenous studies conducted in USA and
smaller countries like japan and south Korea.

14
EXHIBITS
A) LISTS OF TABLES

INDEPENDENT VARIABLE

DEPENDENT
S.NO. VARIABLE
Spending
habits Political Financial Technological y
1 4.8 4 4 5 6
2 6.2 6.14 4.25 5.4 5
3 6.6 6.86 6.25 6.6 7
4 2.2 6.86 4 5.8 4
5 4.8 5.86 3.25 5.4 5
6 4 3.86 3.25 2.6 3
7 4 5.86 4.5 5.6 6
8 5 4.43 4.25 3.6 5
9 5 5.86 4.75 5.8 6
10 5.6 3.43 5.5 4.6 4
11 3.4 5.71 5.5 5.4 5
12 6 5.86 5.5 4.2 6
13 3.8 5.14 4.5 4.2 5
14 2.4 6 3.75 4.8 4
15 5.8 5.29 6.25 7 6
16 5.4 5.43 4.75 6 6
17 4.4 5.29 5 6.2 5
18 4.6 4.43 4.25 5.8 5
19 6.8 5.86 5.25 5.2 6
20 3.2 6.29 3.75 6 5
21 3 3.86 4 3.8 3
22 5.2 3.57 5.5 5.8 5
23 3.8 3.71 4 3.2 4
24 1.2 4.43 4 3.8 3
25 3.8 4.71 5 4 4
26 2 3.86 3.5 3.2 3
27 5.2 5 3 2.6 4
28 3 5.86 4 1 3
29 4.6 4.71 5 5 5
30 5.2 6.29 5.75 6.8 6
31 3.8 2.71 4 4.4 4

15
32 4.6 4.71 4.5 3 4
33 5.2 5.71 3.5 5 5
34 2.4 5.57 3.25 5.8 5
35 4.4 4.86 5 4.6 4
36 4.2 5.57 4 5.8 5
37 2.4 5.86 4 6.6 5
38 3 5.14 3.25 5.4 5
39 5.2 4.86 4 4.2 4
40 3.4 2.86 3.25 4.6 3
41 4.4 3.29 4.5 5.6 5
42 2.8 4.57 2.5 4.6 3
43 4.8 4 3.5 4.4 4
44 5 5.43 5.75 4.8 5
45 3.4 3.57 3.5 3.6 3
46 6.8 5.14 4.25 4.8 5
47 5.8 6.29 4.75 5.8 5
48 5.2 4.57 5.75 4.8 5
49 4.6 4 6.25 1.6 4
50 4.8 4.29 5 3.8 4
51 3 4.86 3.75 4 4
52 4.6 6 4 5 5
53 4.4 3.71 4.25 4 4
54 3.2 3.57 3.25 1.8 3
55 5.4 4 4 6.4 5
56 3.2 6.57 5 4.8 5
57 3.8 4.71 4.5 3.6 4
58 2.8 6.57 5.5 5.6 6
59 2.2 7 1 1 2
60 6 6.29 4 3.4 5
61 5.2 5.86 5.5 6.6 6
62 4.2 6.71 5.75 5.4 5
63 4.6 5.86 5 5.6 5
64 3.4 5.43 5.25 5.2 5
65 5 6.71 4.75 2 4
66 4.6 5.57 4.25 4.6 5
67 2.4 5.57 2 3.4 3
68 2.2 4 1.75 4 3
69 3.2 4.29 3.75 3.8 4
70 6.2 5 5.25 5 5
71 2.4 6 4 4.6 4

16
 72 3.4 5.57 4.5 5 4
73 4 4 4 4 4
74 2.2 4.86 1 4.4 3
75 4.2 4.14 4 3 4

B) STATISTICAL OUTPUT

SUMMARY
OUTPUT

Regression Statistics
Multiple R 0.898875529
R Square 0.807977216
Adjusted R
Square 0.797004486
Standard
Error 0.452817576
Observations 75

ANOVA
Significance
df SS MS F F
Regression 4 60.39360366 15.09840091 73.63502 2.42E-24
Residual 70 14.35306301 0.205043757
Total 74 74.74666667

Standard Upper Lower Upper

Coefficients Error t Stat P-value Lower 95% 95% 99.0% 99.0%
Intercept -0.36095619 0.325426178 -1.10917995 0.271149 -1.01 0.288086 -1.22265 0.500741
Spending
habits 0.261203501 0.049642254 5.261717204 1.49E-06 0.162195 0.360212 0.129756 0.392651
Political 0.215819726 0.052567305 4.105588593 0.000108 0.110978 0.320662 0.076627 0.355013
Financial 0.235990528 0.061435651 3.841263589 0.000266 0.113461 0.35852 0.073315 0.398666
technological 0.365177132 0.044521015 8.202354217 7.74E-12 0.276383 0.453971 0.24729 0.483065

17
CHI-SQUARE TEST

Unsatisfied Satisfied Total

Male 11 28 39
Female 11 25 36
Total 22 53 75
HO : Satisfaction and gender are independent factors
Ha: Satisfaction and gender are dependent factors

Chi-square calculation:

2 2
Satisfaction level Gender Observed frequency (fij) Expected frequency (eij) Diff bet observed freq & expected freq (fij - eij) Squared diff (fij - eij) Sq. diff/ exp. Freq (fij - eij) /eij
Unsatisfied Male 11 11.44 -0.44 0.1936 0.017
Unsatisfied Female 11 10.56 0.44 0.1936 0.018
Satisfied Male 28 27.56 0.44 0.1936 0.007
Satisfied Female 25 25.44 -0.44 0.1936 0.008
0.050

Degree of freedom = (Row-1) *(Column-1)

= (2-1) *(2-1)
=1
The Chi-square statistics value (x2) is 0.50 which in the distribution table lies between 0.90 to 0.80.
Average = 0.90 + 0.80 /2 = 0.85
P-value = 0.85

Conclusion:
Since the alpha value (P-value = 85%) from chi square distribution is > 5%, we accept null
hypothesis.
Satisfaction is independent of the gender.
Satisfaction is not arrived based on the gender.

18
C) GRAPHS & CHARTS

(1) DEMOGRAPHICS

GENDER

female
male male
48%
52%
female

AGE

61 or more
36-60
0%
26-35 9% 18-25
12%
26-35
36-60

18-25 61 or more
79%

19
No. of respondents INCOME

29
24

15

4 3
10000-25000 26000-35000 36000-60000 61000 or more none
24 4 3 15 29
Monthly gross income in thousands

EDUCATION

40

31

2 2

HIGH SCHOOL UG PG OTHERS

20
 OCCUPATION

37

13
2 1 2 7 1 1 1 1 1 7 1

AVERAGE MONTHLY
MAXIMUM CASH SPEND

6,000 - 10,000 1000 -2500

19% 17% 1,000 2,500
10,000 or more
2,600 - 5,000
2,600 - 5,000 10,000 or more 6,000 - 10,000
33% 31%

21
(2) PSYCHOGRAPHIC

PREFERED MODE OF PAYMENT

Always card, unless cash

is specified
20% Always cash, unless card
is specified
42%
it depends

20%
Usually card
1%
17% Usually cash

22
HOUSEHOLDER HELPER'S SALARY
PAYMENT

Daily
Weekly 1% Daily
4%
Monthly
Weekly
Monthly
95%

VISITING BANK

Bi-Weekly
5%2%
5% Fortnightly
15% Monthly
Weekly
Whenever a situation arises
73%

23
(3) LIFESTYLE

AWARENESS OF PRICE OF
COMMODITIES

1 1
7 2
1% 2
15% 11% 3
4% 3
6 4
15% 4
17% 5
5
6
37%
7

CONVENTIONAL WAY OF CASH TO

BE REPLACED BY DIGITAL
CURRENCY
1

1 2
7% 2 3 3
7 5% 1%
31% 4
4 5
5 13%
6 6
19%
24% 7

24
 D) RESIDUAL PLOTS

SPENDING HABITS
Residual Plot
1.5
Spending habits

1
0.5
0
0 2 4 6 8
-0.5
-1

POLITICAL Residual Plot

1.5

1
Residuals

0.5

0
0 2 4 6 8
-0.5

-1

FINANCIAL Residual Plot

1.5
1
Residuals

0.5
0
0 1 2 3 4 5 6 7
-0.5
-1
4

25
 TECHNOLOGICAL
Residual Plot
1.5
1
Residuals

0.5
0
-0.5 0 2 4 6 8
-1
5

FINDINGS
1. Demonetization will reduce the risk and cost of cash handling as soft money is safer than
hard money.
2. The banking system will improve as it will slowly head towards a cashless society.
3. Real estate, jewelry, retailing, restaurants, logistics, consumer durables and luxury brands,
cement and some segments in retail lending space will be facing short term instability.
4. There will be an added replacement costs of currency.
5. Despite certain short term troubles, demonetization is certainly going to give a boost to the
Indian economy in the long run.
6. The smuggling of arms and dealing with the terrorist will not sustain further as all of the
money will be on record now.
7. It is going to drastically affect the corrupt practices.
8. The bank has seen huge inflow of deposits but demand for credit has slowed down.
Therefore, lending rates too will fall but after a gap.

RECOMMENDATIONS
1. The government should have planned the demonetization of notes in a better way i.e.
printing of notes could have been done in a better way so as the suffering of common
man could have been reduced.
2. Although the findings suggest that corruption might be reduced but it will not curb the
practices as the hoarders will find a way of getting out of this demonetization as the
problem is not with money but with the tax system.

26
CONCLUSION

We have successfully reached our objective of our Research project To assess the Impacts the
demonetizations of Rs500 and Rs1000 and To understand the opinion about demonetization
The results obtained are such that majority of the respondents would support this step taken by
the government of India.
BIBLIOGRAPHY

http://thediplomat.com/2016/11/the-trouble-with-indias-demonetization-gamble/
www.google.com
RESEARCH METHODOLOGY by P. Ravilochanan

ANNEXURE

QUESTIONNAIRE ON DEMONETIZATION

SECTION 1 - PSYCHOGRAPHIC
KINDLY TICK AGAINST THE MOST PREFERRED OPTIONS

1. Which of the following do you use your debit/credit card for?

Vegetables and fruits 1 Shopping 5
Monthly Provisions 2 Online shopping 6
Restaurants 3 Petrol bunks 7
Multiplex complexes 4 Pharmacy 8
Others 9
2. Which mode of payment do you prefer?
Usually cash 1
Usually card 2
Always card, unless cash is specified 3
Always cash, unless card is specified 4
3. How frequently do you pay household helper's salary?
Daily 1
Weekly 2
Monthly 3
4. How frequently do you visit bank?
Bi-Weekly 1
Weekly 2
Fortnightly 3
Monthly 4
Whenever a situation arises 5

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DIRECTIONS: Select "1 refers that you STRONGLY DISAGREE that demonetization does not
have those dimensions, and select 7 refers that you STRONGLY AGREE. You may select any
of the numbers in between that shows how strong your feelings are. There are no right or wrong
answers. All we are interested in is a number that best shows your perception about demonetization.

LIFESTYLE

1. Awareness of prices of commodities used in the household.

Strongly 1 2 3 4 5 6 7 Strongly
Disagree Agree
2. I feel that the conventional way of handling cash will be replaced by digital currency.
Strongly 1 2 3 4 5 6 7 Strongly
Disagree Agree

SECTION 2 - CORE QUESTIONS

PERCEPTION & ATTITUDINAL MEASURES

a) SPENDING HABITS

1. My daily consumption of provisions will be reduced.

Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
2. My number of family outings will be less in the coming months.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
3. I will purchase only necessary items.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
4. I will reduce spending on luxury items till the effects of demonetization have stabilized.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
5. I am able to handle educational finances.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree

28
 b) POLITICAL

1. Black money has been exposed.

Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
2. Terror funding into the country is affected.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
3. The opposition parties should do a better job of highlighting the actual problems of the people.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
4. Political parties relying on black money (especially for elections) have been exposed.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
5. Government has taken a step in the right direction by demonetization.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
6. Government could have implemented demonetization better.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
7. The transparency in bureaucracy will increase.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree

c) FINANCIAL

1. I will prefer to take a loan now that the interest rates have come down.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
2. I will prefer to buy a home/land now that the land value has come down.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
3. My budget may become deficit.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
4. My handling of stocks has changed.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree

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 d) TECHNOLOGICAL

1. I order food online rather than going to restaurants.

Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
2. I prefer to pay my travelling expenses through e-transfer.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
3. I will prefer to use online wallets/online card payments henceforth.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
4. I will prefer to do all my shopping/purchases by card hereafter.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree
5. I want merchants to allow card payments even for a purchase of less than 100 rupees.
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree

30
SECTION 3 DEMOGRAPHIC
1. Please indicate your gender.
Male 1
Female 2
2. Please indicate your age.
18 25 1
26 35 2
36 60 3
61 or more 4
3. Please indicate your annual gross income.
10,000 - 25,000 1
26,000 - 35,000 2
36,000 - 60,000 3
61,000 or more 4
4. Please indicate your Education Qualification.
High 1
school
UG 2
PG 3
Others 4
5. Please indicate your current occupation.
Student 1
BPO/IT sector 2
Banking sector 3
Self Employed 4
Family 5
Business
Others 6
6. Please indicate your average monthly maximum cash spend.
1,000 2,500 1
2,600 - 5,000 2
6,000 - 10,000 3
10,000 or more 4

SECTION 4 - OVERALL SATISFACTION

1. On a scale of 1 to7, how would you rate the step taken for demonetization by the government of
India?
Strongly Strongly
Disagree 1 2 3 4 5 6 7 Agree

OTHER COMMENTS

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