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What will be the positive and negative effects of demonization of ₹500/1000 notes on Indian economy?
What are the negative effects of this demonization on the Indian economy?
Some of the negative effects could include short-term liquidity issues, as people will need to exchange their high denomination notes for lower ones, which may cause a temporary cash crunch. It could also result in people with savings in cash losing some value, and there could be some impact on the overall GDP. Additionally, it may lead to an increase in the interest rates, may amplify the impact on the informal sector, which is dependent on cash transactions.