Here are the drawbacks of demonetization on the Indian economy:

• Short-term decline in economic growth
• High costs incurred to print new currency notes and replace old ones
• Decreased consumer spending due to a cash shortage
• Negative impact on the informal sector, which is heavily reliant on cash transactions
• Rise in unemployment as many small businesses were forced to shut down
• Loss of confidence in the banking system due to the initial chaos and confusion
• No significant impact on the black money hoarders as most of the illicit funds are held in offshore accounts

The economic impact of demonetization on the Indian economy was significant. The sudden withdrawal of high-value currency notes led to liquidity issues, which initially caused a decline in economic growth. The informal sector, which accounts for a significant portion of India's economy, was hit the hardest. Small businesses, which often rely on cash transactions, suffered as they were unable to operate due to the cash shortage. The manufacturing sector experienced a slump in demand as consumer spending decreased. On the other hand, the move had a positive impact on the digital payment sector, which received a boost due to the cash shortage. The long-term impact of demonetization is debatable, with arguments for and against its effectiveness in curbing the black economy. Overall, however, the move had a short-term negative impact on the economy, which took time to recover.