Title: Effect of demonetisation and GST on the economy of micro, small and medium enterprises

Authors: Roshani Goel

Addresses: Sanrachana, 29-F, Pragya Sansthan, Ansari Market, Daryaganj, Delhi-110002, India

Abstract: In 2016 and 2017 India faced two major policy implications - demonetisation and GST (goods service tax). The reason for this was to stop inflation, remove counterfeit currency and to promote plastic money. But it is undeniable that different sectors have been negatively affected by these two policies especially the micro, small and medium enterprises (MSMEs). The study explores how demonetisation and GST impacted businesses and small enterprises by leading to a complete change in their working structure. This paper tries to look at mostly the negative effect of the policy without overlooking the positive effect on the MSMEs. The study emphasises that the business of small enterprises became stagnant as they were mostly dependent on cash, in exchange of services; as after note ban, payments became constrained from clients. With the implementation of these policies, The Government of India should have worked to protect the interest of this group and also incentivised their participation in the new policy.

Keywords: demonetisation; goods service tax; GST; micro, small and medium enterprises; MSMEs; digitalisation; negative impact; positive impact.

DOI: 10.1504/IJBG.2024.140580

International Journal of Business and Globalisation, 2024 Vol.38 No.1, pp.28 - 40

Received: 23 Jul 2019
Accepted: 01 Nov 2020
Published online: 28 Aug 2024 *

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