Demonetization was a very bold steps taken by the government.
It's Impact was not as it was desired It has Caused enormous damage. Not just economic but social, institutional and reputational damage-
*Economic -
- slowing of GDP growth and deterioration of other
Economic indicator's.
- economic slowdown triggered by a liquidity shock.
- there are always chances of converting of liquidity crisis into a solvency crisis.
-Stability and certainty are essential ingredients for a well functioning macroeconomy. Demonetisation has dented both.
- sectors such as construction and small manufacturing have been hit the hardest post demonetisation- loss of jobs.
*institutional-
-Overriding institutions, circumventing consensus, and haste
-demonetisation decision was an impingement on RBI’s institutional authority.
*Social -
- Hardship faced by common people in exchanging notes. Many last their life.
-poorer households and small businesses that are struggling to recover from the damage to their livelihoods.
- loss of jobs and retrenchment of many.
CONCLUSION:Therein lies the lessons of governance and nation-building. A truly liberal society is one that strives to ensure that not even a single innocent is punished unfairly. The role of institutions is vital in ensuring such order. It is indeed time to move on from demonetisation but not move away from institutions, procedures and processes.
