Remonetisation Process and Its Impact on India's Economy

The remonetisation process in India was a massive operation that involved distributing new currency notes to replace the old ones. The process started on November 10, 2016, and was completed by December 30, 2016.

Old currency notes worth Rs 15.28 lakh crore were withdrawn from circulation, and new notes worth Rs 7.00 lakh crore were distributed. This massive exercise involved the distribution of 1,764 crore pieces of new currency notes.

The remonetisation process was a complex operation that required coordination among multiple government agencies, including the Reserve Bank of India (RBI), the State Bank of India (SBI), and other commercial banks. It also involved the participation of over 2 lakh bank branches and 17 lakh banking correspondents.

The new currency notes were distributed through various channels, including banks, post offices, and currency chests. The RBI also set up a special task force to monitor the distribution of new currency notes and prevent any irregularities.

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The demonetisation of high-denomination currency notes in 2016 was a major move by the government to curb black money and counterfeit notes in circulation.

It led to a significant shortage of cash in the economy, causing inconvenience to people and businesses.

The Reserve Bank of India (RBI) withdrew Rs 500 and Rs 1,000 currency notes from circulation, affecting over 86% of the total currency in circulation.

The government also introduced a scheme to deposit old notes into banks and exchange them for new ones, with a deadline of 31 December 2016.

The RBI reported that over 1.37 crore (13.7 million) people deposited over Rs 2.5 lakh crore (2.5 trillion) in their bank accounts during this period.

The move was intended to reduce the use of cash for illicit activities and promote digital payments.

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The demonetisation of high denomination notes in 2016 had a significant impact on the RBI, which was dented by the move. This was done to tackle black money and terror financing.

The RBI, along with other sectors, was affected by the demonetisation. The remonetisation process, which began afterwards, is expected to have a positive impact on growth numbers.

The remonetisation is expected to help the cash-intensive services sectors, which in turn will help to augur growth numbers. Nomura predicted that India's FY18 GDP growth will be at 7.1% due to this ongoing remonetisation.

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RBI Governor Urjit Patel listed four reasons for not being able to decipher how many illegal notes have come back to the central bank.

The reasons for this are still unclear, but one thing is certain - the impact of demonetization is still being felt in the economy.

RBI Governor Urjit Patel was unable to provide a clear count of the demonetized notes due to a lack of data.

This lack of data has made it challenging for economists to accurately forecast the economic impact of demonetization.

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The Government of India is preparing to announce its Union Budget 2017-18 in February, and it's unlikely to budget a fiscal deficit target higher than 3.5% of GDP for the fiscal year.

This suggests that the government is taking a cautious approach to managing the economy, especially after the disruptions caused by demonetization.

SBI's chief economic adviser Dr Soumya Kanti Ghosh predicts that India's GDP will be at 5.8% in the third quarter and will recover to 6.4% in the fourth quarter of FY17.

This forecast indicates a gradual recovery of the economy, but it's still a far cry from the pre-demonetization levels.

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India's FY18 GDP growth is likely to reach 7.1%, according to Nomura. This forecast is based on several factors, including the ongoing remonetisation process.

The remonetisation process, which involves putting more cash into circulation, is expected to have a positive impact on the cash-intensive services sectors. This in turn will help to boost growth numbers.

Nomura's forecast of 7.1% GDP growth for India's FY18 is a significant increase from previous predictions.

India's GDP growth is expected to slow down due to a cash crunch.

A significant contraction in effective currency in circulation is the main reason for this decline.

The HSBC report predicts a 2% decline in GDP growth numbers for the third and fourth quarters of the current fiscal.

This decline is a result of the cash crunch that has affected India.

The Reserve Bank of India is currently printing around 200 crore notes a day to aid in the remonetisation process.

This means that a significant amount of currency is being produced to replace the old notes that were demonetised. The RBI is working hard to get the process done efficiently.

By the end of February 2017, the remonetisation efforts will be 70% complete, according to the RBI's current production rate. This is a good sign that the process is moving forward.

Finance Minister Arun Jaitley has hinted that not all of the Rs 15.44 lakh crore worth of currency junked will be remonetised through issuance of new notes.

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The RBI has slowed down on printing Rs 2000 denominations, indicating a conscious decision to reduce their circulation.

According to RBI's annual report data, they have been printing heavily Rs 500 denominations, which suggests a shift in their remonetisation strategy.

The RBI has stopped printing Rs 2000 notes, but if you already have one, it remains a legal tender.

A new denomination, the Rs 200 note, is expected to enter the market soon, marking another significant development in the remonetisation process.

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The whole process of remonetisation won't take long, according to Finance Minister Arun Jaitley.

Reserve Bank of India is currently printing around 200 crore notes a day, which is a massive effort.

This means that the remonetisation efforts will be 70% complete by the end of February 2017, a significant milestone in the process.

Not all of the Rs 15.44 lakh crore worth of currency junked will be remonetised through issuance of new notes, as digital currency will fill the gap.

Digital Payments and Economy is a crucial aspect of remonetisation. The Reserve Bank of India (RBI) has set a target of 30% of all transactions to be digital by 2023.

Cashless transactions have increased significantly in India, with a growth rate of 30% between 2016 and 2018. This shift towards digital payments has also led to a decrease in cash usage, with the cash-to-GDP ratio declining from 12.4% in 2015 to 9.4% in 2020.

The government has also launched several initiatives to promote digital payments, including the BHIM app, which has seen over 100 million downloads since its launch in 2016.

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Banks should eliminate convenience charges to implement a digital payment system across the country in the post-demonetisation era. This is according to the chief of India's telecom watchdog.

In the post-demonetisation era, digital payments are becoming increasingly important. Banks need to make digital payments more convenient and accessible to the public.

The chief of India's telecom watchdog has made this recommendation to promote digital payments. This is a step towards making digital payments more widely accepted and used.

Digital payments can be made more convenient by eliminating convenience charges. This will make it easier for people to switch to digital payments.

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E-commerce companies experienced a significant de-growth in November and December, with volumes down by 15-20% compared to expected volumes.

This decline in volumes is largely due to lower Cash on Delivery (CoD) levels targeted by companies, which will impact the performance of logistics companies by 6-10% in revenue.

CoD levels have declined by approximately 10% in the last three months, but are expected to be substituted by other digital payment formats.

E-commerce companies may have to relook at their economics of operations and rework their overall pricing strategy with reduced levels of CoDs.

E-commerce industry is expected to get back to normal levels in the next 4-6 months.

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