ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Repercussions of Protracted Currency Shortage across Two Models of Financial Inclusion in India

Following the announcement of demonetisation on 8 November 2016, India saw the withdrawal of nearly 86% of the cash in circulation. This caused prolonged currency shortages and impacted employment, sales, income, loan payback capacity, savings and by extension, financial inclusion. A survey conducted among two distinct groups in Mumbai and Pune, three months after demonetisation, in April–May 2017, reveals the adverse impact of currency shortages on the incomes and livelihoods of those employed in tiny, informal enterprises. With a decline in the sales in their businesses, their income and savings fell, and so did the demand for credit.

Currency Shortage

The after-effects of the demonetisation of 500 and1,000 banknotes still continued to be felt well into 2017. A study of Pune’s local markets enumerates the impact, compounded by the confusion over the goods and services tax.
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