The demonetization policy of 2016 had a significant impact on the Indian economy. Some of the major impacts are as follows:

• Disruption in supply chains: The sudden withdrawal of high-value notes led to a cash crunch, which disrupted supply chains in various sectors, especially in the unorganized sector.
• Slowdown in economic activities: The cash crunch resulted in a slowdown in economic activities, which impacted sectors such as construction, real estate, and automobile.
• Short-term decrease in GDP: Due to the slowdown in economic activities, there was a short-term decrease in GDP growth. However, it recovered in the following quarters.
• Increased digital transactions: Demonetization led to an increase in digital transactions, which has had a positive impact in the long run by bringing more people into the formal economy.
• Reduction in black money: The primary objective of demonetization was to reduce the circulation of black money, and the policy had some success in achieving that objective.

Despite the negative short-term impact on the economy, demonetization seems to have had a positive impact in the long term by shifting the economy towards a more formalized and digitized system.