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ISSN: 2306-3483 (Online), 2071-8330 (Print)

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Why demonetize the Indian economy?

Vol. 12, No 4, 2019


Augendra Bhukuth


ITSMI School of Management, 

Paris, France

Why demonetize the Indian economy?

Bernard Terrany


Ipag Business School, Paris France







Abstract. This paper is a conceptual analysis of demonetization. The main aim of this paper is to analyze the reason why a government would like to demonetize its economy. The main reasons for demonetizing an economy are to modernize the banking sector, to provide banks with liquidity, to reduce the importance of the informal financial sector, to give people the opportunity to hold bank accounts, which in turn gives people access to the credit market. This is part of the digitalization of the economy which is a part of the demonetization policy. The other aim of this policy is to fight against inflation and attract foreign direct investment. The make-in policy and demonetization policy are interrelated.


Received: March, 2019

1st Revision: July, 2019

Accepted: November, 2019


DOI: 10.14254/2071-8330.2019/12-4/1


JEL ClassificationE42, E52, E63, F33

Keywordsdemonetization, inflation, FDI, make in policy, banking sector, India