Has Demonetisation Pushed Digitalisation in India? Some Counter Evidences

India witnessed demonetisation in November 2016, when high value denomination notes of Rs. 500 and Rs. 1000 were withdrawn at a single stroke which extinguished about 86 percent of the total currency value in circulation. Demonetisation which aimed to curb black money, terror funding and counterfeiting at the first place, was later projected as the government’s push for digitalisation drive. In this paper, we analyse the effect of demonetisation on digital payments viz. debit card, point of sale transactions, and mobile transactions using an intervention analysis of time series. The findings of the Study negate the impact of demonetisation on digitalisation of the Indian economy.
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Measures of Inflation in India

This paper brings out the salient features of different measures of inflation in India. Before adopting the flexible inflation targeting framework, RBI focused on using Wholesale Price Index (WPI) as the measure of headline inflation. Consumer Price Index for Industrial Workers (CPI-IW) was the widely used measure of CPI inflation. International practice however, suggests the use of CPI as the measure of headline inflation. There are also limitations of using WPI as a measure of inflation. Hence, Central Statistics Office (CSO), launched a new measure of CPI, known as CPI-Combined which incorporates all Indian rural and urban households. Stylized facts used in the paper show that inflation dynamics in India is characterised by a divergence between CPI-IW and WPI indices. Against this backdrop, the paper examines Granger Causality between the two indices in a Vector Auto Regressive framework. Results of the study indicate that there is bidirectional causality between the two indices which does not get affected even during the period of global financial crisis, when the divergence between the two indices was observed for the longest duration.
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Skill Premium and Technological Change

The paper tests the presence of skill premium and capital skill complementarity in the Indian Economy. Using NSSO data for skilled and unskilled workers measured on the basis of educational qualification, the study attempts to find factors that affect the movement in skill premium in the Indian labour market. Using two different definitions, the study finds that skill premium does not show a stagnant behaviour. This was due to factors specific to the Indian economy- a large reserve army of labourers and a weak relative absorptive capacity of different sectors. Firms prefer adopting techniques such as flexibility, outsourcing, de-unionisation and hiring contract workers for maintaining higher level of profits rather than adopting new technologies. On account of these factors, Skill Biased Technical Change (SBTC) and acceleration hypothesis could not be observed in the Indian Economy.
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Technology, Productivity and Employment: An Empirical Analysis of Indian Industries

Since 2000, technology has changed at a tremendous pace and has transformed the face of industry in the entire world. Many among the top Fortune 500 companies, Amazon, Apple, Facebook, Google, Microsoft, Uber, Wal-Mart, are all technology driven and are also mainly in the services sector. While opening many new windows for investment and increase in productivity, the new technology is simultaneously disturbing the existing technological complementarities and exerting a lot of pressure on the supply of the matching skill. Many jobs which exist today would disappear tomorrow and many new jobs will get created tomorrow which do not exist today. So there is a simultaneous creation and destruction of jobs and the net impact thus depends upon their respective pace. Skill mismatches are now a common feature in all economies. While new technology is expected to increase productivity of labour and hence employment especially- in the long run, it is also simultaneously expected to displace some labour because of its very nature in the short run. A part of the explanation for the structural shift in employment in India from agriculture to services could lie in the availability and use of new technology. The present paper aims to look at the impact of technology change on labour productivity growth and employment growth for the Indian manufacturing and service industry.
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Demonetisation in India: An Impact Assessment

Indian economy took a historic move of banning high denomination notes measured as 87 percent of total currency in November 2016. The early objectives of the move were linked to various issues such as curbing black money, removing counterfeit currency and stopping terrorist funding. But in due course the implications of demonetisation have been pronounced in the form of wider tax base through accounted income, progress towards a cashless economy, increase in bank deposit balances under Basel III accord, controlling inflationary activities, removing the asset bubbles through limited cash availability, etc. In this regard, several academics have carried out their own analysis of demonetisation and its effects but most of the research work has addressed the partial effects of the demonetisation move and have been carried out in the early months of the move. But now that the economy has crossed about one and a half year of this landmark reform, there is ample scope to measure the true impact of demonetisation on the financial system, inflation and real economy of India. The paper concludes that overall the effects of demonetisation on the economy can be said to be neutral. Interestingly, macro indicators of the economy have improved in recent years despite two major initiatives of demonetisation and GST reforms. This reflects that the resistance of the Indian economy continues due to its strong demand. This is of prime importance for reviving investment in the economy, which in turn, has wider implications for the overall growth and development.
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