




































Australian Finance & Banking Review 

 Vol. 5, No. 1; 2021 

                                                                               ISSN 2576-1196   E-ISSN 2576-120X 

           Published by CRIBFB, USA 

 

1 

AN EXPLORATORY STUDY ON EFFICACY OF 

DEMONETIZATION IN INDIA: POLICY ROLLOUT ON 

DEMONETIZING OLD CURRENCY 
 

 
Abdul Masood Panah 

PhD Scholar 

Department of Commerce 

Mangalore University, Mangalagangothri 

Mangalore, Karnataka, India, 574199 

E-mail: mazzpanah@gmail.com 

 
 

Dr. Y. Muniraju 

Professor & Dean  

Department of Commerce 

Mangalore University, Mangalagangothri 

Mangalore, Karnataka, India, 574199 

E-mail: drymuniraju97@gmail.com 

 

ABSTRACT 

Demonetization is the process of declining the use of currency from circulation by the 

government or monetary authorities in a country. This research paper analyses the efficacy of 

Indian demonetization from common public perspectives, the policy that the government of India 

has implemented to fight against black money, drying the financial roots of terrorism, and direct 

the civilization towards digital transactions and a cashless economy. A field survey was 

conducted in Karnataka and Kerala’s coastal region by distributing a structured questionnaire 

among the common public to generate the data. The authors run descriptive statistics and 

ordinal regression analysis to obtain the result for the study’s objectives. The descriptive 

statistics result found that demonetization increased the number of bank account holders in 

India. There is not much impact of demonetization on controlling evasion of tax and illegal 

investments of black money, and the policy adversely affects regular business in the country. The 

findings from ordinal regression reveal that the time frame was given to the public to demonetize 

their old notes were sufficient; money circulation was well planned at the time of 

demonetization. The policy implemented at the right time and the common public, despite facing 

enormous challenges while purchasing goods and services at the time of demonetization, 

considers that demonetization implementation was effective. 

 

Keywords: Demonetization, Common Public, Efficacy, Policy Implementation, Currency. 

 

JEL Classification Codes: E5, E6, E7, E58, E60. 

 

 

mailto:mazzpanah@gmail.com
mailto:drymuniraju97@gmail.com


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INTRODUCTION 

Money is an essential instrument in the economy. Money is influencing the output and 

employment by affecting the cost of goods and services. It is also controlling the aggregate flow 

of saving and investment (M C Vaish, 2005).The majority of the people worldwide use money 

daily to buy or sell goods and services, pay or get paid, or write or settle contracts. Notes are 

central to the workings of the modern economy (McLeay & Radia, 2014). The central bank issue 

maintains the currency and is authorized to decline or ban the money from circulation in a 

country’s economy (Khiaonarong & Humphrey, 2019). Cash is the most extensively used 

payment instrument worldwide(Paul van der Knaap et al., 2018), but cash will no longer be king 

(Massi et al., 2019) as a large number of countries in the globeare trying to reduce the use of 

cash in their economies. Economies that are much cash-intensive tend to grow slowly and miss 

out on significant financial benefits. 

Conversely, economies that switch to digital are much successful; the switch can boost 

economic growth by as much as three percentage points (Massi et al., 2019). Numerous countries 

attempted to digitalize their economies and people by demonetizing their currencies and 

overcoming hyper-inflation and also, getting rid of the defects of black money and counterfeit 

currency (Mahajan & Singla, 2017; Chowdhury & Hosain, 2018). Demonetization is the process 

of declining the use of money from circulation by the government or monetary authorities in a 

country (Ghosh et al., 2017). It is the process where governments are stripping a currency unit or 

the realmoney as a legal tender, usually by replacing it with a new currency (Panah & Muniraju, 

2020).Therefore, the common public cannot use the old money in their daily dealings for 

purchasing goods and services. India to fight black money, fake currency, which was a good 

source for terror groups, and also, to reduce the number of cash in circulation, which was directly 

related to corruption in the country, and to digitalize the economy demonetized 86% of the total 

currency in circulation on 8 November 2016 (Ghandy, 2016; Sivathanu, 2019). India’s 

government has given the common public a limited period to bring their old notes and exchange 

them with the new currency (Beg & Joshi, 2017). Therefore, this paper aims to study the 

common public’s opinions on policy reactions, understand their hardships due to the notes’ 

demonetization, and study whether the policy implementation was effective. The study results 

depict that demonetization increased the number of bank account holders in India. There is not 

much impact of demonetization on controlling evasion of tax and illegal investments of black 

money, and the policy adversely affects regular business in the country. Despite facing enormous 

challenges while purchasing goods and services at the time of demonetization, the common 

public considers that demonetization implementation was effective in India. 

 

LITERATURE REVIEW 

Demonetization is one of India’s most memorable economic events that affect all citizens and the 

economy through the liquidity side. The objectives of the demonetization were annihilating black 

money, counterfeit currency, drying up the financial roots of terrorism, and direct the economy 

of the country and civilization toward cashless transactions and cashless economy (Briceno & de 

Hurtado, 2019; Chodorow-Reich et al., 2020; Ghosh et al., 2017; Kumar, 2017; Mohan & Ray, 

2019; Sharma, 2019; Vij, 2018). Studied the impact of demonetization on the Indian economy 

(Briceno & de Hurtado, 2019; Chodorow-Reich et al., 2020; Kumar, 2017), the results obtained 

from demonetization in India are a shortage of liquidity, changes in consumer preferences, 

increased inflation, decreased productive activities, the new distribution of monetary cone, and 

more significant electronic usage transfer and increased deposits, and decreased the banks’ credit 



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growth in India.(Mohan & Ray, 2019; Sharma, 2019; Vij, 2018), the decision of demonetization 

shocked the economy for a while. It impacted the economy in various sectors. The size of black 

money reduced to 15% of official GDP, the GDP has been hampered. There was a positive 

impact of the demonetization on the CPI inflation rate as the rate dropped post demonetization. 

The exchange rate of foreign currencies has not been significantly impacted.(Ghosh et al., 2017), 

studied the impacts ofdemonetization on the economy, they mentioned that demonetization 

doesn’t lead to a reduction in inflation as it can only be achieved through the recession; their 

book (2017, p15, 58, 64) discussed that demonetization resulted in the most significant adverse 

effect on the informal economy due to loss of liquidity, which drastically affected trading and 

supply chain across the country.(Dash, 2017; Lal, 2018; Samuel & Saxena, 2017; Singh, 2018), 

Studied positive and negative impacts of demonetization. The demonetization shows a mixed 

effect on various issues; the shortage of cash creates hardships and challenges in the everyday 

living of the common public in short-rub, but its impact will defiantly prove positive in the long-

term.(Beg & Joshi, 2017; Dash, 2017; Koshy, 2017; Mahajan & Singla, 2017; Mishra, 2017; 

Mohindra & Mukherjee, 2018), studied the impact of demonetization on the common public. 

Their studies show thatdemonetization mainly impacted ordinary people rather than the people 

who are the main contributors to black money. Its impacts had a negative consequence on the 

poor. Indeed, the demonetization left many people with low access to cash in their daily lives. 

Different dimensions and effects of demonetization have been studied in the existing literature; 

this paper will address the efficacy of demonetization from common public perspectives on 

policy rollout demonetizing old currencies in India. 

 

Statement of Research Question 

Demonetization is not a recent phenomenon in India, and India has been implemented 

demonetization twice earlier. Suddenly, at midnight, November 2016, the government of India 

announced to the public that due to the existing large number of black money, destroying the 

financial resource of terrorist groups, and directing the country toward a digitalizedeconomy and 

a cashless society, the high-value currency which creates 86% of the total money in circulation 

will be no longer a legal tender and cannot be exchanged for purchasing goods and services until 

they replace it with the new currency in a short period. The next day, many of the common 

public rushed to the banks to exchange their old notes. ATMs had stopped working; the bank 

service rendered to people was not sufficient enough to reach all. The ordinary people were at 

the forefront of the government’s decision to suffer from the harms of demonetization and 

shortage of liquidity in the country. Therefore, the scope of the efficacy of demonetization from 

the general public perspectives makes it more attractive to the researcher to study in-depth their 

opinions and reactions. On the other hand, it will add to the existing body of knowledge and act 

as a potential reference for policymakers for better future national policy implementation. 

1) Did the policy rollout on demonetization effective? 

2) Does demonetization help to achieve tax-compliance among citizens? 

3) Does demonetization help in curbing the misuse of black money (Illegal activities)? 

4) Does demonetization affect the SME’s (petty business) 

Research Objectives 

 To study if the policy implementation was effective. 

 To Study the opinions of the public on policy reaction 

 To understand their hardships due to the implementation of the policy. 

 



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Research Limitation 

This study is limited to the common publicfrom the Coastal Region of Karnataka and Kerala.The 

researchers had faced a lack of understanding of local languages for interacting with the 

commonmasses and convincing them to respond to the questionnaire,lack of common public 

awareness about scientific research, and the researcher’s vast challenges for conducting this 

research. Many times, the respondents were not ready to spare their time responding to the 

questionnaire.  

 

Research Delimitation 

Efficacy of demonetization in India; Policy rollout on demonetizing old currency is a fascinating 

topic and studied by conducting a survey between the general public inthe coastal region of 

Karnataka and Kerala states of India. The datasets were generated from the general public 

through sharing the questionnaires from August 2019 to November 2019.Section three of this 

study discusses the research methodology and section four represents the discussion of the 

results, and chapter five concludes the paper.  

 

RESEARCH METHOD 

Population & Sample 

The authors obtained the variables measured for this research model from a review of relevant 

literature.For this study, the respondents are the general public from the Coastal Region of 

Karnataka and Kerala.This study’s source is from different groups; mostly, the researchers 

surveyed the people who do not have stable income such as, daily wage workers, agriculturalists, 

small business holders, retailers, and people who are part of the unorganized labor class. Non-

probabilistic convenient sampling technique was conducted. The nonprobability sampling 

technique is mainly used in surveys where the total population is unknown or cannot be 

individually identified(Chawla & Sondhi, 2015; Kumar, 2011).  

 

Data & Questionnaire 

The authors collected the respondent’s responses to the pre-tested designed questionnaire. The 

questionnaire has been distributed between the common public in the coastal areas of Karnataka 

and Kerala. A total of 450 questionnaireswere printed and distributed among various groups of 

the respondents, and 274 respondents answered the survey questionnaire, of which 250 

respondents considered appropriate responses for the study. The responses’ internal consistency 

has been checked using Cronbach’s alpha test and the scale items as 0.825, indicating that the 

investigation is 82.5 percent reliable.  

  

Data Analysis 

The authorsanalyzed the common public reactionsto demonetization policy implementation by 

India’s government using descriptive statistics. The researchers used ordinal regression analysis 

(ORA) to measure the common public’s opinions on policy rollout on demonetizing old currency 

to understand its efficacy from the general public perspectives. The data on the government’s 

appropriateness to demonetize the old money is considered as the response variable. And the 

money circulation planning,the time framegiven to the public to demonetize their old notes, 

public awareness on objectives of the policy rolled, the right time for demonetization 

implementation, facing problems while purchasing goods and services at the time of 

demonetization, lack of prior preparation, waiting in queues for exchanging old notes, and the 



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quality service rendered by the banks are considered as covariates or explanatory variables. This 

is done to verify the common public reactions relating to the policy rollout’s efficacy on 

demonetizing old currency matches and predicting the general public concerning the 

implemented policy’s appropriateness. 

Furthermore, the researchers consider the categorical measure of numerous age and 

professional groups as explanatory variables in the analysis to measure the policy 

appropriateness from different age and occupation groups’ perspectives. The case processing 

summary of the categorical elements and the response variable is represented in table 01. The 

authors classify the respondent’s age into six alphabetic groups, group A. [25-30], and group B. 

[31-35], are the youngsters.Group C. [36-40], and group D. [41-45], represent middle-aged 

people. Group E. [46-50] and group F. [50 &above] depict the veterans. Similarly, researchers 

categorize the occupational groups as daily wage workers, agriculturalists, small business 

holders, shopkeepers, and group ‘others’ representing the people from the unorganized labor 

class (housewives) and students.  

The following equation signifies the general expression of our ordinal regression model. 

log𝑖𝑡𝑌𝑖,𝑗 = ∝𝑗− ⌊∑ 𝛽𝑖𝑋1𝑖
+ ∑ 𝑌𝑖𝑋2𝑖

+ 𝛿𝐹 + 𝜍𝐵 + 𝜂𝐼 + 𝜆𝑀 + б𝑆 + 𝜃𝑇 +  ԳL + ЧY + 휀𝑗

𝑝

𝑡=1

𝑛

𝑖=1

⌋ 

 

Where, 𝑌𝑖,𝑗is thecumulative probability of the𝑗thcategory for the 𝑖thcase; log𝑖𝑡𝑌𝑖,𝑗is the 

log of an odds ratio⌊log
𝜓

1−𝜓
⌋Where 𝜓probability of the respondents in favor of 

demonetization.∝_j is the threshold/intercept value; X1 and X2 are factors in the ordinal 

regression model representing the categorical variables such as age and profession group, with β 

and γ coefficients, respectively; n and p indicate one less than the total number of categories in 

the age group and professional group, respectively. The variables F, B, I, M, S, T, L, and Y 

represent the model’s covariates.Money circulation was well planned;the time framegiven to the 

public to demonetize their old notes, public awareness on objectives of the policy rolled, the 

right time for demonetization implementation facing problems while purchasing goods and 

services at the time of demonetization, lack of prior preparation, waiting in queues for 

exchanging old notes, and the quality service rendered by the banks.The coefficient of these 

covariates is δ, ζ, η, λ, б, θ,Գ, and Ч respectively.  

 

Table 1. Case processing summary statistics (Demographic Information) 

 

Panel A: Appropriateness of the Decision 

Demonetization: SD D N A SA Total 

Frequency  

(%): 

39 

(15.6) 

31 

(12.4) 

51 

(20.4) 

73 

(29.2) 

56 

(22.4) 

250 

(100.0) 

Panel B: Demographic Information 

Demographic Information   Population of the respondents 

Profile Categories Frequency Percentage  



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Age 

25-30 

31-35 

36-40 

41-45 

46-50 

51 and Above 

Total 

103 

58 

20 

36 

13 

20 

250 

41.2 

23.2 

8.0 

14.4 

5.2 

8.0 

100.0 

Gender Male 

Female 

Total 

175 

75 

250 

70.0 

30.0 

100.0 

 

Education 

Illiterate 

Up to primary school 

Up to 10th standard school 

Up to 12th standard school 

Undergraduate 

Post-graduate 

Total 

17 

23 

29 

64 

86 

31 

250 

6.8 

9.2 

11.6 

25.6 

34.4 

12.4 

100.0 

Family size Join family 

Nuclear family 

Total 

115 

135 

250 

46.0 

54.0 

100.0 

 

Occupation 

Daily wage earner 

Agriculturalist 

Shopkeeper 

Small business 

Others 

Total 

40 

18 

46 

37 

109 

250 

16.0 

7.2 

18.4 

14.8 

43.6 

100.0 

Source: Authors’ Computation based on the questionnaire 

 

The respondents’ demographic profile is reported in table 01 based on Age, Gender, 

Education, Family size, and occupation. 103 respondents, representing 41.2 percent of the total 

respondents, are 25-30, followed by age group 31-35, representing 58 respondents and 23.2 

percent of the total respondents. Similarly, the age group of 46-50 and above 51 represents 5.2 

and 8.0 percent of the respondents. Likewise, the gender of the respondents is dominated by male 

and female, 175 respondents, and 70.0 percent are male, and 75 respondents and 30.0 percent are 

female. We have also asked about the respondents’ education, family size, and occupation, 

represented in the table. Daily wage workers dominate the respondents’ occupation, 

agriculturalist, shopkeeper, small business andothers’ represent those who do not come under 

working class such as housewives (homemakers) jobless people who are a part of the 

unorganized labor class. 

             The necessary model fit condition has been checked using baseline comparison and tests 

the ordinal regression assumptions using a multi-collinearity test and parallel line test to assess 

the empirical approach’s suitability. Multi-collinearity exists when the regression equation’s 

independent variables are positively correlated with each other(Zikmund, 2010). Table 04 shows 

the tolerance level and the Variance Inflation Factors (VIF) for all the model variables. The VIF 

values <1 or > 10 indicate that the variables are multi-collinear. The VIF between 1 and 10 in 

each casesuggests the absence of multi-collinearity(Gujarati & Porter, 2009). The multi-



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collinearity in regression analysis refers to how strongly interrelated the model’s independent 

variables are(Zikmund, 2010). 

                The other assumption relating to the ordinal regression is proportional odds, which 

specify the correlation among the response variable. The explanatory variable does not change 

for the response variable’s categories. The parameter estimations do not change for cut-off points 

as well. In ordinal regression, the assumption of the proportional odds test observes the various 

categories’ quality and resolves whether the assumption holds or not. Suppose the assumption 

does not fit, the interpretations about the results will be inaccurate(Erkan & Yildiz, 2014). 

Researchers examine the test assumption with support of the full likelihood ratio test that 

compares the fitted location model to a model with varying location parameters(Laerd Statistics, 

2013). The results of these tests are discussed in the below sections. 

 

RESULT & DISCUSSION 

In the survey pertaining to the efficacy of the demonetization and the policy rollout on 

demonetizing old currencies from common public perspectives, most of the respondents favorthe 

policy rollout on demonetizing old currencies by the government. The summary of the survey 

findings shows that respondents considered the decision asappropriate. Concerning changes in 

the number of bank account holders’ pre and post-demonetization, the result is depicted in the 

following table. 

 

Table 2. Bank Account holders 

 

Bank account holder before demonetization No Yes Total 

Frequency   65 185 250 

Percentage 
 

(26%) (74%) (100.0) 

Bank account holder after demonetization   No Yes Total  

Frequency   15 235 250 

Percentage   (6%) (94%) (100.0) 

Source: SPSS output 

 

Table 2 reveals that the numbers of bank account holders among the respondents’ pre and 

post-demonetization.Where 185 respondents are 74% of the study respondents, have a bank 

account before the demonetization. Likewise, the table shows that the number of bank account 

holders increased from 185 to 235 respondents, which is 94% of the study respondents. 

Therefore, the results of table 02 indicate that demonetization increased the number of bank 

account holders in India. 

Authors measure the common public’s opinions on the efficacy of the demonetization in 

controlling tax evasion, controlling black money, illegal investments, and regular business 

transactions. The following table 03 shows the views of the common public on the efficacy of 

demonetization. 

 

Table 3. Opinions of Common Public on Demonetization 

 

Demonetization helps controlling tax 

evasion SD D N A SA 



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Frequency 22 38 75 84 31 

Percentage (8.8%) (15.2%) (30%) (33.6%) (12.4%) 

            

Demonetisation helped control the 

investment of Black money SD D N A SA 

Frequency 16 28 66 80 60 

Percentage (6.4%) (11.2%) (26.4%) (32%) (24%) 

            

Demonetizationadversely affected 

regular business transactions SD D N A SA 

Frequency 21 23 47 125 34 

Percentage (8.4%) (9.2%) (18.8%) (50%) (13.6%) 

Note: Likert scale data tenets choice from 1-5, where 1 stands strongly disagree (SD), 2 stands 

for disagree (D), 3 stands for neutral (N), 4 stands for agree (A), and 5 stands for strongly agree 

(SA). 

 

The results depict that the ordinary public hasperceived that India’s demonetization 

policy was not effective in controlling tax evasion, illegal investments of black money. At the 

same time, 63.6% of the respondents agree and strongly agree that demonetization adversely 

affected India’s regular business transactions. 

            In order to get a clear sign about the independent variable i.e. appropriateness of the 

demonetization decision by the government from the common man (general public) perspectives, 

researchers run ordinal regression analysis, the appropriateness of the government decision to 

demonetize the old currencies and introduce new currency, reflecting the insights and 

perceptions of common public as a response variable and the policy rollout on demonetizing old 

currencies measured via planning of money circulation at the time of demonetization, difficulties 

while purchasing goods and services, the timing of the demonetization, the time frame given to 

common public to demonetize their old currencies, lack of prior preparation, public awareness on 

objectives of the policy, waiting in lines to change the old coins, and the quality service rendered 

by the banks at the time of demonetization, represented in five-point Likert scale as a covariates 

laterally with age and occupation-based categorical variable.  

 

Table 4. Test of Ordinal Regression Assumptions 

 

 Panel A: Test of Multi-collinearity 

Variables  

 

Collinearity 

Statistics 

Money 

Circula

tion 

The 

time 

frame 

has 

given 

Public 

awarene

ss on 

Objectiv

es 

The right 

time to 

impleme

nt 

Demon 

Lack of 

prior 

preparati

on 

problems 

while 

purchasi

ng goods 

Waiti

ng in 

lines 

quality 

services 

rendere

d by 

banks 

Tolerance 0.561 0.671 0.699 0.471 0.591 0.486 0.630 0.778 

VIF 1.781 1.622 1.431 2.122 1.693 2.062 1.587 1.285 

   Panel B: Test of Parallel Lines  

Model -2 Log Likelihood Chi-Square  df Sig. 



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Null Hypothesis 501.057     

General 476.682b 24.375c  51 0.999 

Source: SPSS output 

 

                 The model diagnostic statistics results have been reported in table 04 to understand 

whether the ordinal regression model used in the study satisfies all pre-conditions/assumptions. 

A Multi-collinearity test that checks forthe high degree of correlation between the explanatory 

variables specifies that the study’s model is free from multi-collinearity issues as the VIF values 

areless than 10. Tolerance values are greater than 0.10 for all the explanatory variables. 

 The ordinal regression models used in the study are based on the fundamental 

assumption of proportional odds that highlights an identical effect is observed from each 

explanatory variable at each cumulative split of ordinal response variables(Laerd Statistics, 

2013). Theparallel line test is used to prove whether the model used in this study satisfies the 

proportional odds assumption (see table 04, panel B). The parallel lines test result shows an 

insignificant probability value at a 5 % level of significance. We failed to reject the test state’s 

null hypothesis that the location parameters (i.e., slop coefficients) are the same across response 

categories. This indicates that the model used here also satisfies the assumption of proportional 

odds. 

             Before discussing the ordinal regression estimates, the researchers verified the goodness 

of fit by comparing the baseline model with the model used. The significance of the (McCullagh 

& Nelder, 1989) chi-square value depicts that the model used here indicates better prediction 

than the simple intercept-only (baseline) model, which is similar to making a guess based on the 

marginal probabilities for the outcome categories{Citation}(Elamir & Sadeq, 2010). The 

following table, 04, shows a summary of model fitting. 

 

Table 4. Overall Model Fitting Information 

 

Model Fitting Information 

Model -2 Log 

Likelihood 

Chi-

Square 

df Sig. 

Intercept Only 774.581       

Final 501.057 273.525 17 0.000 

Source: SPSS output 

 

After conducting the diagnostic check and model fit verification, the researchers further 

discuss the ordinal regression results. The following table, 05, reveals the estimates of ordinal 

regression parameters. 

 

Table 5. Estimates of Ordinal Regression Parameters  

 

 

Variables 

  

Coefficient 

Notation 

 

Estimate 

 

Std. Error 

 

Wald 

 

Sig. 

 

Odds Ratio 

Constant   [SD] α1 3.296 0.909 13.142 0.000*** 27.005102 

Constant    [D] α2 4.839 0.938 26.629 0.000*** 126.31409 



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Constant    [N] α3 6.978 1.011 47.638 0.000*** 1073.2446 

Constant    [A] α4 9.751 1.101 78.387 0.000*** 17163.848 

Money Circulation δ 0.581 0.150 15.082 0.000*** 1.7875468 

Lack of Prior preparation ζ -0.063 0.138 0.205 0.651 0.9392421 

Problem while Purchasing 

goods 

η -0.380 0.145 6.826 0.009** 0.6840535 

Public awareness on objectives λ 0.080 0.139 0.329 0.566 1.0830595 

Time frame given б 0.330 0.128 6.680 0.010** 1.3907601 

Waiting in lines θ 0.089 0.146 0.372 0.542 1.0932785 

Quality services rendered Գ -0.060 0.136 0.196 0.658 0.9417167 

The right time to implement 

demonetization 
Ч 1.512 0.181 70.007 0.000*** 4.5372563 

Age group       

A. [25-30] ß1 0.733 0.518 1.998 0.058* 2.0802892 

B. [31-35] ß2 0.797 0.544 2.143 0.043* 2.2184108 

C. [36-40] ß3 0.495 0.667 0.551 0.458 1.6404722 

D. [41-45] ß4 -0.075 0.589 0.016 0.898 0.9273929 

E. [46-50] ß5 0.391 0.722 0.294 0.588 1.4787684 

F. [50 & Above] ß6 0a         

Occupation group       

[Daily wage workers] ϒ1 0.251 0.396 0.403 0.526 1.2855481 

[Agriculturalists] ϒ2 0.043 0.554 0.006 0.938 1.043906 

[Shopkeepers] ϒ3 -0.576 0.383 2.262 0.133 0.5620558 

[Small Business holders] ϒ4 -0.023 0.404 0.003 0.955 0.9773644 

[Others] ϒ5 0a         

Source: SPSS output. Note: *indicate values significant at 5% level ** indicate values significant 

at 1% level 

 

Table 5 shows the results of the estimate of ordinal regression parameters, among the 

covariates used to capture the influence on the response variable, the variables relating to the 

planning of money circulation, difficulties while purchasing goods and services, the time frame 

of the demonetization by the government, and the time frame given to the common public to 

demonetize their old currencies are turned to be statistically significant. And the variables such 

as lack of prior preparation, public awareness on objectives of the policy, waiting in lines to 

change the old currencies, and the quality service rendered by the banks at the time of 

demonetization are not statistically significant.  

The variable that shows the planning of money circulation at the time of demonetization 

indicates that a unit increase in the value of the variable will increase odds in favor of the 

response on the appropriateness of the decision to demonetize the old currency and introduce the 

new money over the answer against the demonetization decision are more significant than 

1.7875468, times. Likewise, the odds of getting a response in favor of the decision to demonetize 

old currency are greater if respondents are in prefer, positive response relating to the reactions on 

difficulties while purchasing goods and services, the time frame of the demonetization by the 

government, and the time frame given to the common public to demonetize their old currencies 

as indicated by higher odds ratio relating to these variables. 



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In the categorical variables age- groups, the results show that there is more possibility 

that respondents in the age group (25-30), (31-40) the youngster and middle-aged individuals are 

more likely in favor of positive response toward the decision to demonetize old currency and 

introduction new currency to the economy, compared to the veterans, the statistically significant 

values for the age group (25-30) and (31-40) reveals that the odds are firmly in favor of the 

decision is 2.0802892, and 2.2184108, times greater than the veterans as shows by cumulative 

odds ratio values. 

Likewise, in the case of the occupational group, the result indicates that there is a 

possibility that the respondents in daily wage workers and agriculturalists are more likely in 

favor of the demonetization decision compare to the group’s shopkeepers, small business 

holders, and group others that represent the people from unorganized sectors. The daily wage 

workers’ statistical values indicate that the odds are firmly in favor of the demonetization 

decision is 1.2855481, and 1.043906 times greater than the other class of people, due to the 

cumulative odds ratio. 

 

FINDINGS & CONCLUSION 

The study explores the efficacy of demonetization from India’s common public perspectives, the 

policy implemented by India’s government to fight against black money, drying the financial 

roots of terrorism, and direct the civilization towards digital transactions anda cashless economy. 

The study’s main purpose is to study if the policy implementation was effective, study the 

public’s opinions on policy reactions, and understand their hardships due to policy 

implementation. The descriptive statistics results suggest that the demonetization increased the 

numbers of bank account holders in India. There is not much impact of demonetization on 

controlling evasion of tax and illegal investments of black money, and the policy adversely 

affects regular business in the country. The ordinal regression findings reveal that the ordinary 

public, despite facing enormous challenges while purchasing goods and services at the time of 

demonetization, consider that demonetization implementation was a practical step in directing 

the civilization towards the digital transaction and cashless economy, the results obtained from 

the ordinal regression analysis also depicts that the government implemented the policy at the 

right time, the government well planned the money circulation at the time of demonetization, the 

time frame given to the public wassufficient enough to change their old notes. Before 

demonetization, there was a proper system in place, and the general public has not faced any 

problems. The otherwise innocent common public was harassed and disturbed to their day-to-day 

transactions and withdrawn their complex and earned money in the name of controlling black 

money, terrorism, and fake currency circulation should not be punished to the common public. 

 

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