Paper Contents
Abstract
This paper explores the long-term and short-term effects of demonetization on small sector enterprises, a crucial component of the economy that significantly contributes to employment and GDP. Demonetization, implemented primarily as a measure to combat black money and streamline the economy, has had multifaceted repercussions on small businesses, which often operate on narrow profit margins and liquidity constraints. In the short term, many small enterprises experienced severe cash shortages, leading to a decline in sales and an increase in operational challenges. The immediate effects included disrupted supply chains and reduced consumer spending, which inflicted a cascade of financial difficulties on these businesses. Additionally, sectors highly reliant on cash transactions, such as retail and agriculture, faced pronounced hardships. Conversely, the long-term effects of demonetization present a more complex picture. While some businesses have adapted by adopting digital payment solutions, fostering financial inclusion, and improving their record-keeping practices, the overall impact on entrepreneurship and sustainability remains mixed. This study analyzes quantitative data and qualitative insights from small sector entrepreneurs to provide a nuanced understanding of these dynamics. The findings suggest that while demonetization has catalyzed certain sectors towards modernization and formalization, it has also exacerbated the vulnerabilities of small enterprises. The paper concludes with policy recommendations aimed at mitigating the adverse impacts of such drastic economic measures on small-scale industries, emphasizing the need for supportive frameworks that can enhance resilience and promote growth in the sector.
Copyright
Copyright © 2025 Hriday Aneja. This is an open access article distributed under the Creative Commons Attribution License.
