Impact of Demonetization on Employment in India

Abstract

This paper explores impact of demonetization on employment scenario in India particularly informal sector employment. In India, more than 90 percent people are employed in the informal sector and majority of wage payments to this sector are in cash form. Statistically, more than 95% of total transactions were in cash form (Live Mint, January, 01, 2017). Given the nature of huge informal employment, the decision to demonetize currency overnight changed the labour market dynamics significantly by rendering millions of workers exposed to increased uncertainties in employment. Findings of the study suggest that demonetization was the prime cause of the income and employment slowdown. Sales of large equipment and machinery in rural areas fell down considerably cutting down jobs in the face of note ban.