PROJECT PROPOSAL

CRITICAL
REASONING AND
SYSTEM THINKING
DEMONITIZATION IN INDIA
SUBMITTED BY

ANSHUMAN PANDEY
PRIYA YADAV
VIVEK SUNDAR
YASHKIRANJEET SINGH

Problem Situation: Demonetization in India

Issue: Impact of Demonetization on the economy

Description of the Issue: The aim of demonetization is to wash the stock of
black money out of the economy and get it into the banked and taxable, part of
the economy. The demonetization of the 500 rupees note and the 1,000 rupees
note the two highest currency denominations available in India will likely hit the
economy hard in the short term. It also affects GDP growth crashing to 0.5% in
second half of financial Year 2016-17.
The liquidity squeeze caused by demonetization will be negative across sectors
with high level of cash transactions. Some segment will be facing short term
instability such as real estate, jewelry, retailing, restaurants, logistics, consumer
durables and luxury brands, cement. Those companies with high level of debt
will face more pressure and can face loan defaults.
On the other hand, it is going to drastically affect the corrupt practices. People
who are holding black money in cash will not be able to exchange much as they
would be in a fear of getting penalized and prosecuted by the authorities.
Enemies of the country which are involved in counterfeit currency and
terrorism will not be able to continue it further for quite some time at least.