Effect of demonetisation in india on ppc curve
Answers
In starting of demonetization (short period) India face many problems. In India everyone is not aware about internet banking of online payment people face many problem and do not use fuller ultilised of resources in short period. This cause PPC shift to leftward.
On the other hand after sometimes everyone know about Net banking and online payment this cause almost all payment made through online not through cash. This cause fuller utilization of resources. In this case PPC shift Right Ward.
On 8 November 2016, the Government of India announced the demonetisation of all ₹500 (US$7.40) and ₹1,000 (US$15) banknotes of the Mahatma Gandhi Series.[2] The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.[3][4] The sudden nature of the announcement—and the prolonged cash shortages in the weeks that followed—created significant disruption throughout the economy, threatening economic output.[5][6] The move was heavily criticised as poorly planned and unfair, and was met with protests, litigation, and strikes.
Prime Minister of India Narendra Modi announced the demonetisation in an unscheduled live televised address at 20:00 Indian Standard Time (IST) on 8 November.[7][8] In the announcement, Modi declared that use of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series would be invalid past midnight, and announced the issuance of new ₹500 and ₹2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.
The BSE SENSEX and NIFTY 50 stock indices fell over 6 percent on the day after the announcement.[9] In the days following the demonetisation, the country faced severe cash shortages with severe detrimental effects across the economy.[10][11][12] People seeking to exchange their bank notes had to stand in lengthy queues, and several deaths were linked due to the rush to exchange cash.[13][14]
Initially, the move received support from several bankers as well as from some international commentators. It was heavily criticised by members of the opposition parties, leading to debates in both houses of parliament and triggering organised protests against the government in several places across India.[15][16][17] The move is considered to have reduced the country's GDP and industrial production. As the cash shortages grew in the weeks following the move, the demonetisation was heavily criticised by prominent economists and by world media.