Journal of Rural Development

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Impact of Demonetisation in Rural Areas Through the Lens of Financial Inclusion


Affiliations
1 Assistant Professor, Department of Economics, School of Liberal Studies, Pandit Deendayal Energy University, India
2 Assistant Professor, Amrut Mody School of Management, Ahmedabad University, India
3 Associate Professor, Amrut Mody School of Management, Ahmedabad University, India
     

   Subscribe/Renew Journal


The paper studies the impact of demonetisation that was announced in the year 2016 on the rural population of Kutch district of Gujarat state. Rural areas in India, with about 38 per cent of bank branches in August 2016 (RBI 2017) and 69 per cent of the population (Census 2011), it will be critical to experience demonetisation. In this context, the study examines the hypothesis that the segment of the population which could easily access banking facilities and shift to cashless transaction might have had to bear the lower cost of demonetisation than those who could not. Both supply and demand side of the status of financial inclusion is considered. Although the study did not find any significant difference in the cost of exchange or impact on consumption and income between the inclusive group and excluded group, it implicitly brings out the challenges of financial inclusion in the rural economy.

Keywords

Demonetisation, Financial Inclusion.
User
Subscription Login to verify subscription
Notifications
Font Size

  • Aga, A., & Choudhari, C. (2016). Notebandi Takes the Sauce Out of Nashik’s Tomatoes. Economic and Political Weekly, 51 (53), 7–8. Govt. of India (2011), Census India 2011, Retrieved from http://www.censusindia.gov.in/2011census/PCA/PCA_Highlights/pca_highlights_file/India/Chapter-1.pdf

  • Guérin, Isabelle, et al. (2017). "Insights on demonetisation from rural Tamil Nadu." Economic and Political Weekly 52 (52), 44-53.

  • Chakarvorty, B. (2017). ‘Early Lessons from India’s Demonetization Experiment’, Harvard Business Review, Retrieved from https://hbr.org/2017/03/early-lessons-from-indias-demonetization-experiment

  • Chattopadhyay, S. (2019). The Macroeconomics of Demonetization: Theory and Some Conjectures. South Asian Journal of Macroeconomics and Public Finance, 8(2), 118–143.

  • Chithra, N.R., & Selvam, M. (2013). Determinants of Financial Inclusion: An Empirical Study on the Inter-State Variations in India. Social & Political Philosophy eJournal., DOI: dx.doi.org/10.2139/ssrn.2296096

  • Christabell, P. J., & Vimal, R. A. (2012). Financial Inclusion in Rural India: The role of Microfinance as a tool. IOSR Journal of Humanities and Social Science, 2(5), 21-25. Dasgupta, D. (2016). ‘Theoretical Analysis of ‘Demonetisation’, Economic and Political Weekly, 51(51): 67-71

  • Demirguc-Kunt, A., Klapper, L., Ansar, S., & Jagati, A. (2017). Making It Easier to Apply for a Bank Account: A Study of the Indian Market. The World Bank. https://doi.org/10.1596/1813-9450-8205

  • Demirguc-Kunt, A., Klapper, L., Singer, D., & Ansar, S. (2018). The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank Publications.

  • Dev, S. Mahendra (2006), Financial Inclusion: Issues and Challenges, Economic and Political Weekly, 41 (41): 4310-4314.

  • Govt. of Gujarat (2011), District Census Handbook: Kutch, Directorate of Census Operations Gujarat Series 25, Part XII-B, 2011

  • Govt. of India, Ministry of Finance (2016), Pradhan Mantri Jan Dhan Yojana (PMJDY), Progress Report, Retrieved from https://www.pmjdy.gov.in/

  • Zhu, H., Gupta, A., Majumder, B., & Steinbach, S. (2018). Short-term Effects of India’s Demonetization on the Rural poor. Economics Letters, 170, 117–121.

  • Kumar, Arun (2017). Economic Consequences of Demonetization: Money Supply and Economic Structure, Economic and Political Weekly, 52(1),14-17. Economic Consequences of Demonetisation. (2015). Economic and Political Weekly, 52(1), 7–8.

  • Nair Smita, (2016, 15th November). Flashback 1978: The Transition to New Notes was Less Painful. The Indian Express, Mumbai. Retrieved from https://indianexpress.com/article/india/india-news-india/flashback-1978-currency-ban-500-1000-invalid-the-transition-to-new-notes-was-less-painful-4375865

  • Nair, T. S., & Tankha, A. (2015). Inclusive Finance India Report 2014. New Delhi: Oxford University Press.

  • PWC (2015). Disrupting Cash: Accelerating Electronic Payments in India, 2015. Retrieved from https://www.pwc.in/assets/pdfs/publications/2015/disrupting-cash-accelerating-electronic-payments-in-india.pdf

  • Rangarajan, C. (2008). Report of the Committee on Financial Inclusion, January 2008

  • Reserve Bank of India. (2017). Annual Report: 2016-17, August 2017

  • Shah Ajay. (2016). “A Monetary Economics View of the Demonetisation”, Business Standard, 13th November 2016 Singh, R., & Prajapati, M. R. (2020). An Agribusiness Perspective of Demonetization in Central Region of the State of Gujarat in India. Journal of Economic Structures, 9(1), 1–20.

  • Sudipto Karmakar & Abhinav Narayanan. (2020). Do Households Care about Cash? Exploring the Heterogeneous Effects of India’s Demonetisation. Journal of Asian Economics, 69, 101-203.

  • Tulasi, G., Golait, R., Sethi, M., & Goel, S. (2017). Involuntary Exclusion and the Formal Financial Sector. Economic and Political Weekly, 52(36), 67-72.

  • Waknis, Parag (2017). Demonetization through Segmented Markets: Some Theoretical Perspectives, Economic and Political Weekly, 52(9).

  • World Bank. (2017). “The Global Findex Database.” http://www.worldbank.org/globalfindex


Abstract Views: 120

PDF Views: 0




  • Impact of Demonetisation in Rural Areas Through the Lens of Financial Inclusion

Abstract Views: 120  |  PDF Views: 0

Authors

Himani Baxi
Assistant Professor, Department of Economics, School of Liberal Studies, Pandit Deendayal Energy University, India
Sonal Yadav
Assistant Professor, Amrut Mody School of Management, Ahmedabad University, India
Mita Suthar
Associate Professor, Amrut Mody School of Management, Ahmedabad University, India

Abstract


The paper studies the impact of demonetisation that was announced in the year 2016 on the rural population of Kutch district of Gujarat state. Rural areas in India, with about 38 per cent of bank branches in August 2016 (RBI 2017) and 69 per cent of the population (Census 2011), it will be critical to experience demonetisation. In this context, the study examines the hypothesis that the segment of the population which could easily access banking facilities and shift to cashless transaction might have had to bear the lower cost of demonetisation than those who could not. Both supply and demand side of the status of financial inclusion is considered. Although the study did not find any significant difference in the cost of exchange or impact on consumption and income between the inclusive group and excluded group, it implicitly brings out the challenges of financial inclusion in the rural economy.

Keywords


Demonetisation, Financial Inclusion.

References





DOI: https://doi.org/10.25175/jrd%2F2022%2Fv41%2Fi1%2F172466