Demonetisation hit economic activity by 3 percentage points: New study

The first district-level study on demonetisation says full impact was not visible in official statistics

Demonetisation caused a 2-3 percentage-point reduction in jobs and economic activity, new research has found, and a similar contraction in bank credit vis-a-vis the normal course of activity, in the two months after the note ban was announced on November 8, 2016.

This is the first research on demonetisation in which the impact was studied across India’s districts (sub-national level), and the effect mapped on to the national level. Till now, only national level effects were studied, which underestimated the impact, the economists noted in the study. 

“Cash shortage caused by demonetisation generated a decline in national economic activity of