The document discusses the impact of India's 2016 demonetization on the IT sector. While most sectors struggled initially as cash became scarce, the IT sector saw increased digital transactions as people turned to online payments. This boosted industries like e-commerce and payments processing. A survey found initial support for demonetization fell from 60% to 13% as people faced difficulties exchanging cash. However, demonetization accelerated India's shift to digital payments and increased mobile wallet usage. The author suggests cryptocurrency could further curb corruption by eliminating physical money.

1. Impact of Demonetization
in IT sector
Impact and the ultimate solution
Muthiah Abbhirami
2/28/2017
http://www.abbhirami.org/

2. http://abbhirami.blogspot.in/
Abstract
In 2016, Indian government demonetized the 500- and 1000- rupees notes, the bigger
denomination in the currency system, as they have been accounted for higher circulation. The
prime aim behind demonetization was to combat corruption and crime, in the country. But for
now everybody is pushed into a state having a question- whether the actual motto was achieved?
Monetization, is the act of legalizing money, ie. Giving value to money. Demonetization, is the
act of stripping the value of the money. As stated earlier the main reasons to strip the value of
money is for the following purposes: to combat corruption and crime, to fight inflation, to lessen
cash-dependent economy and to facilitate more trade.
Any government decision or act must be in such a way that it does not affect the livelihood of the
people. Since money is the medium , chosen to bring a change, it should be handled with utmost
meticulousness. In reality many common people did face hardships in getting their amount from
their bank account because of the lack of efficiency in carrying out this process. Their daily
routines were affected and still exists this problem, in many parts of India.
“The change” was that decided to be established was not so effectively handled as expected
instead landed the common people in large distress.
Every sector in India was affected by the change but not IT sector, hugely. Demonetization did
give newer possibilities of pulling and pushing money online. Since the normal circulation of
money became a tedious process, many have turned to net-banking and other online payment
mode, which only brought a positive effect to the IT sector. India had turned more digitized after
this change.
To talk about the COD aspect of industries such as all online ecommerce, they had to with stand
a huge loss on COD, as many people from India believe COD better to other payment modes. As
stated once again, it is a push to use the other mode of payment
Giving the value, back to money is, Remonetization. The real meaning of it is still not seen in
this economy as; demonetization did not really fulfill the goal which it tried to do. Unless and
until the goal is achieved, remonetization cannot come into play.

3. www.abbhirami.blogspot.in
Introduction:
Demonetization had a serious impact on the people. Many sectors did not know how to regain to
their normal state to function, as most of their incomes and expenditure were in large
denomination. Not just large companies and organizations were affected, but also the common
people who lost their daily routine and were in queues to get their money from banks and ATMs.
Taking into consideration the Information Technology sector, the impact was not that severe.
Demonetization actually paved path to Digital India. As many found ordinary cash flow to be
difficult some were forced to rely on net -banking and other online payment transaction.
Demonetization and IT sector
As far as IT sector is concerned it contains 2 major components : IT services and Business
Processing Outsourcing (BPO). As stated earlier the result of demonetization did not really have
an adverse effect on IT sector instead paved way to many online payment modes, thus only
boosting it. IT service sector comprises the payment industry, which is regarded as one of the
main service. E-commerce companies can also be taken into account for a better analysis. In case
of e-commerce companies they had a hit on their COD sales.
Payment Industry
Talking about the payment industry, demonetization has helped in massive onboarding!
Everyone involved in the wide customer and merchant spectrum is going to have to become part
of the digital payments landscape in the industry. Several payment solution providers have been
actively campaigning for the merchant on-boarding, while offering convenience and ease to the
end users by promoting mobile wallets downloads. This should see a much faster decline in the
current percentage of 70% of online shopping done by cash in the next 12 months to 18 months.
Besides, merchants are now more aware and informed to become part of the digital wave.
Electronic Payment processing players like PayTM enable online merchants to tap the population
which has an online presence . This population is much larger than the online buying population.
This is possible by enabling merchants to offer electronic payment methods while selling on
facebook and other social media channels.

4. www.abbhirami.blogspot.in
Analysis and interpretation of data
For the better understanding the following survey has taken to figure out people favouring or not
favouring, demonetization
At the start of demonetization
S.NO Favouring /
Not- favouring
Number of Respondents Percentage (In %)
1. Favouring 18 60%
2. Not-Favouring 12 40%
Total 30 100%
Table 1.1

5. www.abbhirami.blogspot.in
Table 1.1 depicts the number of respondents from IT sector favouring and non- favouring
respondents at the start of the process.
Interpretation: It is believed that the number of respondents had a belief that this would definitely
bring out positive results.
Within one -week span, after demonetization scenario
S.NO Favouring /
Not- favouring
Number of Respondents Percentage (In %)
1. Favouring 4 13.33%
2. Not-Favouring 26 86.66%
Total 30 100%
Table 1.2
Table 1.2 depicts the scenario after a week.
Interpretation: After a week the number of respondents favouring it was lowered down to a great
difference of about 46.67% and were affected by the serious effect of demonetization.
They reasons to have not favoured was not because of the industry impact instead since their
normal livelihood was affected.
www.abbhirami.blogspot.in

6. Findings from the survey
The survey clearly depicts that since many people were affected in not carrying out their daily
routines they were not favourable to the act of demonetization. And thus we finds many people
not favouring to the act of demonetization
But as far as IT sector is concerned it has seen growth of more internet banking. In fact, since
demonetization has come into effect, mobile wallets have witnessed a massive rise in app
downloads. With programs of financial inclusion, digitization of the economy and increased use
of smart phones, online transactions are already quite popular among the urban Indian
population. According to analysts at Technavio, by 2018 the mobile wallet market in India will
grow at a CAGR of 140%, while the global mobile wallet market will register a CAGR of 34%
by 2020.
Suggestion
These are the following methods that can be used in general to curb what the act of
demonetization aimed to do -(to curb corruption)
Individualized service tax rate
The static money in locked bank accounts in the banks has to be freed and must be utilized. Only
when the money is in movement we can expect some profit or loss. There is no use of stagnant
money. As we can see the tax rates are highly increased within a few years instead of having a
tax rise(Service tax) that hits common people, tax rates can be individualized.
Crytocurrency
Only if there is physical money, there exists a problem. What if there is no physical money?
Crytocurrency can be seen as a better solution to the problem.
Why use cryptocurrency?
1. It is fast, than any online bank transactions
2. It is cheap, no transactions charges
3. Central Bank has no authority over it.
4. You can create your own money : through a process called mining
What is mining in cryptocurrency?
1. Mining process requires specific software which solves the bitcoin algorithm producing
it.
www.abbhirami.blogspot.in

7. 2. Miners are people who have powerful machine running the bitcoin codes, they are the
ones to approve the transactions.
3. These bitcoin algorithm requires heavy and powerful processing machines.
4. Now there are chips available named: ASIC: Application-specific integrated Circuits that
are powerful in solving complex math problem in producing it.
Conclusion
The motto to curb corruption is appreciable but the way it was carried did not really fulfil the
motto. This only gave hardship to many ordinary people.
Demonetization instead made many turn to internet for their money transactions, thus helping
Digital India movement.
Many countries like US, Germany,Switzerland have started to accept cryptocoins as their mode
of payments.
India has the possibility of bring this into actions, which will definitely Digitize India and the
same time break many barriers that are confined to money.

8. www.abbhirami.blogspot.in