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Demonetization: Impact on Small Scale Industries


Rupali P Shendkar                                 Prof. Swati B Shinde

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Mamasaheb Mohol college                               Mamasaheb Mohol

Paud road Pune                                               Paud
road Pune





Demonetization is one of the
important tools used by the government of India to deal with the barrier mainly
named as black money as well as the other reason as to increase the impact of
plastic money and E-Transaction within the business and for other activities.
Indian economy is one of the fastest growing economies in the world and the policies
and norms being footstep up by the government held quite responsible for the
any extreme change in the growth of economy. Small scale industries act as the
backbone Nation. The economic development of the Nation generally depends upon
the status of this Small scale Unit.

In this paper we are going to
analysis the impact of demonetization on Indian economy and to analyze the
changes and agendas link with the demonetization.


Demonetization is essentially an act of band the currency unit from its legal
status. It is mainly an act of changing the national currency of any nation.
There may be any reason of demonetization, mainly to bring into account the unaccounted
income of the Nation. There are many reasons for a nation to demonetize their
local units of currency:-

To Control inflation rate within the

To fight against corruption and misappropriation,
tax avoidance etc.

To discourage a cash dependent

To facilitate trade Export and


History of Demonetization:


Indian history of demonetization has
been quite interesting due to its political impact. It is very clear that the demonetization
has show to be a Healthy step taken by any Govt. which only benefits to the
Nations development when we talk in a long term situation. But it is also an
interesting as the Government in India whenever spirit to take such an
important Step of demonetization has has face lots of controversial oppose
within its background and opposition parties. When we took a look into the
history of demonetization in India, It happen thrice in 1946, 1978 and recently
in 2016.

Recently, in 2016 our prime minister
and Central Government has taken a courageous Step of demonetization, with effect
to which all the 500/- and 1,000/- Rs currency has been demonetized from the immediate
effect. The main reason behind this step is to fight against the black money
and to bring into account the ban accounted currency spread over the nation.
Though due to this step many effects has been taking place some positive some negative
but it is one of the essential necessity of the nation.

The worst hit sector due to its
effect has been SSI who is completely depends upon the rolling of currency and
investment which get blocked due to the step of demonetization. Consideration
its effect has been only for the shorter period of time, its long term impact
can be easily quiet in the coming future.


SSI (Small Scale Industries):


In Indian economy small-scale and
cottage industries occupy an important place, because of their employment potential
and their contribution to total industrial output and exports.                Characteristics of Small-Scale Industries:

1) Technology

2) Management and control

3) Area of operation

4) Ownership

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