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1 ISSN: Vol. 6, No.2 Mar-April 2017 The Impact of Demonetization on Retailing An Analysis Ms. Kokila. V Dr.(Mrs.).R.Ushadevi, Research Scholar, Research Adviser, Associate Professor in Commerce, vikokila93@gmail.com Ushadevirathinavelu99@gmail.com Abstract Demonetization is a radical monetary step in which a currency units status as a legal tender is declared invalid. This is usually done whenever there is a change of national currency, replacing the old unit with a new one. The main objective is to curb black money, eliminate fake currency notes from economy, corruption and terrorism. The demonetization process affects all levels of people and their lives including the retail merchants. The objective of the analysis is to know impact of the Demonetization process on Retailing. Based on the analysis it can be concluded that there is an impact on the routine activities of the retailing due to Demonetization. Key words: Demonetization, Retailer, Economy, Government. Introduction Demonetization is the withdrawal of a particular form of currency from circulation. Through demonetization the old currency is replaced by the new currency or a currency circulation is blocked. There are multiple reasons why a country demonetizes its currency, some reasons are to check the inflation, to curb the corruption, eliminate the fake currency notes from the economy and to promote the cashless transactions. Recently the Indian government has decided to demonetize the biggest denomination notes i.e Rupees notes, this step has been declared as a master stroke for the Indian economy. The main objective of this step is to unearth the black money, to curb corruption, counterfeit currency as well as terror financing. This step is considered as the biggest cleanliness drive against the black money in the history of Indian economy. As per RBI, 87% transactions in India are cash transactions and this loophole is used by corrupted people to build a parallel economy with unaccounted money. This parallel economy helps in terror financing which in turn hampers the growth and development of country. Currently high- value notes account for total value of 86% of the notes circulation in India. It is expected that this step will help in reducing the fiscal deficit of India and promote the cashless economy in India which can be easily monitored. Demonetization creates panic among the common man, particularly among retailers and shopkeepers. 52

2 Demonetization Methodology Demonetization is the act of stripping The analysis is based on descriptive nature both a currency unit of its status as legal tender. It occurs primary and secondary source of data were used. The whenever there is a change of national currency. The primary sources of data were collected through self current forms of money are pulled from circulation and constructed questionnaire. A sample of 80 respondents are often to be replaced with new notes or coins. from various retailers in Karaikal District were taken for Sometimes a country completely replaces the old currency the study by using Simple random sampling method. The with new currency. collected data have also been tested with the help of Simple percentage and Chi square test. The respondents Retailing from various retailers are grouped into three major A retailer or retail store is a business enterprise categories for the purpose of analysis such as essential which sells primarily to ultimate consumers. Retailing products, need based and service renders. includes all activities directly related to the sale of goods Hypothesis or services to the ultimate consumers. There is no significant impact of Demonetization Retailer or retail stores consists of street vendors, on Retailing. small shops, provisional shops, super markets, Limitation of the Study departmental stores, vegetable shops, textiles, medicals, The study was confined only in Karaikal District restaurants, entertainment places, theatre, ticket and the results of the study cannot be generalized. reservation, recharge shops, pawn brokers etc.. Review of literature Statement of the Problem Arpit Guru and Shruti Kahanijow (2010), Demonetization is a step of central government aims to Researcher analysed the black money income? Need for eliminate black money and also it will promote the amendment in DTAA &ITEA and analysed that black sustainable and inclusive economic development. It will money is spread everywhere in India up to a large extent surely bring the clear view of every transaction within the which continuously stashed towards abroad in a very large country and promote cashless transaction. This step will amount. The researcher also identified how black money affect general people to some extent but for the benefit of had caused menaces in our economy and in what ways it future generation such decisions are inevitable. is used. Eventhough the demonetization process affect the retailers Sukanta Sarkar (2010), conducted a study on the in large scale those who are providing essential goods and parallel economy in India: Causes, impacts and service to the people. This analysis helps to know how government initiatives in which the researcher focused on and what ways the demonetization process affect the the existence of causes and impacts of black money in sellers, shop owners, street vendors, small and medium India. According to the study, the main reason behind the enterprises. generation of black money is the Indian Political System Objectives of the study that is the Indian government just focused on making 1. To discuss the concept of Demonetization. committees rather than to implement it. The study 2. To analyse the Impact of Demonetization process on concludes that laws should be implemented properly to Retailing. control black money in our economy. 53

3 Geeta Rani, (2016), The study shows that initially the demonetization effects on market were painful but this investigate the shopkeepers and consumers to adopt cashless means such as paytm, debit card use, internet banking to buy goods. By adopting the cashless means economy will be sound in coming time and Indian Economy will get benefits of early and hassle free transactions. Tax Research Team (2016), The main objective is to analyze the impact of demonetization on Indian economy and it shows the impact of such a move on the availability of credit, spending level of activity and government finances. Care Rating (Professional Risk opinion 2016), Suggested that the initial disruptions in the system, eventually change well assimilated and will prove positive for the economy in the long run. Black money hoarders will definitely lose out and eventually boosting the formal economy in the long run. Short term fall in real estate prices might benefit middle class citizens. This move by the Government along with the implementation of the GST will eventually make the system more accountable and efficient. Veerakumar., K, (2017), This paper analysed demonetization is taken for several measures such as tax evasion, counterfeit currency and funding of illegal activities. Some people are depositing currency notes in excess of specified limits directly into bank accounts and has showed the unaccounted income subject to higher tax and other penalties. Alternative payment methods such as e-wallets, online transactions using e-banking, debit and credit card usage have been increased and this will shift an efficient cashless infrastructure. Analysis and Interpretation The following table shows the number of respondents and their categories of business. Table 1. Number and nature of respondents. S.No 1 2 Categories of Respondents Essential product shops Need based retailing N Percentage Service renders Total N = % Chart 1. No. of respondents Essent. Shops Need based Service The retail shops classified into three major categories such as essential product shops, need based retailing and service renders. The essential product shops includes the supply of food, water, milk, medical and other provisional stores, fuel filling station etc... The need based retailing includes other than the essential products such as textiles, jewelers, gold pledging, foot wears, books and stationery etc... The service renders include recharge shops, ticket booking, entertainment places, theaters etc... 54

4 Table No. 2. Impact of Demonetization on Retailing. Level of impact Total χ2 Table Remarks Variables Low Moderate High Value value Essential product shops Need based retailing Service retailing Total NS Inferences The table value of Chi-square for 2 degree of freedom is at 5 % level of significance is and the calculated value is Since the calculated value is more than the table value the null hypothesis is rejected. It can be concluded that there is significant impact of Demonetization on Retailing. Findings 1. The essential product outlets was suffered more due to demonetization process. From the introduction stage, their sales was fall down up to 40 percentage from the previous month sales. 17 retail outlet are of the opinion that the impact of demonetization activities was high out of 30 outlets, 8 retail outlets reported that moderate impact on our business. The sales of retail outlets decreased due to non-availability of proper cash and also exchange of new currency notes. 2. Most of the need based retailing shops was moderately impacted by the demonetization process i.e. out of The wholesalers denied extending the credit span of time and the retailer credit facility to their customer was increased to some extent. 6. The retailer suffered lot and not able to collect their previous dues from customers. 7. The need based and service retailers sales was dropped at significant level. 8. During the demonetization process the consumer reduce their purchase nearly 25 percentages and hold the low denomination currency for their essential needs. 9. Most of the retailers accepted and supported the outlets, 9 outlets have more impact by the demonetization activity for national interest. demonetization out of 25. People are not interested to spend other than the essential products due to Suggestions The demonetization activity had a great and insufficient cash in hand. brave step to enhance the transparent economic 3. The service retailer sales also affected due to demonetization at moderate level, their sales or service was comedown to 60 percentage during that time. Most of the people spend their available hand cash to fulfil their essential needs only. 4. All the retail outlets was severally impacted by the demonetization activity because there is no provision of digital payment mode like swiping machine, mobile payments and net transfer for their sales. development. The activity will give the benefit after some months although during that process it has impact on all the sectors particularly the retailing. Therefore the following suggestions will help to improve our retail outlets. The government should initiate and take step for digital payment system in all the retail outlets with proper training and awareness. The banks should provide swiping machines to all the retail outlets with free of cost and exempt from service tax. 55

5 Conclusion The government has initiated a war against corruption, black money and eliminating fake currency through the demonetization activity. Due to the demonetization activity there are several implications that have to be faced by the average middle class people, farmers, all types of retailer and wholesaler, service renders and the economy as a whole. All forms of retailers are affected in various ways due to demonetization process although most of the retailers were supported and adjusted themselves for demonetization activity because of our national interest. Scope for Further studies The analysis can be expanded to cover the statewise awareness and impact of Demonetization. Also the study may be conducted to know how the demonetization activity has influences the various sectors of economy and life of the people. IRACST International Journal of Commerce, Business and Management (IJCBM), References 1. Arpit Guru and Shruti Kahanijow, The black money income? Need for amendment in DTAA&ITEA, International Journal of Applied Research, 2010, 4(10). 2. Sukanta Sarkar, The parallel economy in India: Causes, impacts & government Initiatives, Economic Journal of Development Issues, 2010, 11(12), (1-2) pp Veerakumar., K, A Study on People Impact on Demonetization, International Journal of Interdisciplinary Research in Arts and Humanities 2017, 2 (1), pp Geeta Rani, Effects of Demonetization on retail outlets, International Journal of Applied Research, 2016, 2(12), pp Tax Research Team, Demonetization: Impact on the Economy, National Institute of Public Finance and Policy, New Delhi. No. 182, Nov Care Rating Professional Risk opinion, Economic consequences of demonetization of 500 and 1000 Rupee Notes, Economics Policy View, Nov 09, Sandeep kaur, Demonetization and its impact in India, International Journal of Research, Nov.2016, 3(17), pp www. Squirepattonboggs.com sp#ixzz4ah4v0f00 AUTHORS PROFILE First Author Ms. V. Kokila., M.Com, (Gold Medal)., M.B.A., SET., Research Scholar, vikokila93@gmail.com Second Author Dr.(Mrs.). R. Ushadevi, M.Com., M.Phil., Ph.D., Research Adviser, Associate Professor in Commerce, Ushadevirathinavelu99@gmail.com 56