2020, Vol. 3, Issue 2

author(s)
Shounak Das, Pinaki Ghosh and Akash Balmiki

abstract
The Indian government announced the demonetization on 8th November 2016 effective from 9th November 2016 which makes the legal validity of all Rs. 500 and Rs. 1000 bank notes obsolete. The main objective of the government behind this drastic decision is to suppress the face of corruption and parallel economy in the country. It has been reported by RBI that 99.3% of the targeted bank notes, worth Rs 15.30 lakh crore has been returned to the banking system. Experts consider this data as a basis to opine that government’s attempt to give a massive blow to the parallel economy is not so fatal. Though many experts of the banking field termed the decision as bold and good, later on it has been realized that due to this hurried decision; Indian economy suffered a financial crisis which impacted the overall growth. The prime reason for it is, extreme prolonged cash shortages and that impacted industries, organizations and other economic avenues seriously. Due to all these factors, later on merits of the decision has been questioned from several corners of the world. Decision has been basically proclaimed as hurried and unplanned. The Automobile sector, Real-estate sector, MSMEs and some other key sectors reflected a huge impact by this decision as observed practically and from various reports and articles. Researchers here conducted parametric test to observe whether demonetization has any significant impact on the profitability of the two companies. It has been observed based on the required tests that there is significant impact of demonetization on certain profitability parameter of Tata Motors while the profitability parameters of DLF India reflect no impact of demonetization. The researcher also tries to highlight the reasons for significant or insignificant impact of demonetization on the profitability parameters of above two companies.