Demonetization Impact on Liquidity of Large Corporates in India

Abstract

This paper ‘Demonetization Impact on Liquidity of Large Corporates in India’ focuses on the changes in the Liquidity pattern of the companies’ in-order to cope up with the Business Risk that emerged due to the unforeseen Demonetization Policy of the Government of India. The study aimed at finding the performance of various sectors on liquidity parameters during pre and post demonetization period. The study covered the companies listed in NIFTY 50 over the period of 6 years from 2014-2019. The methodology used for analysis is the longitudinal study under descriptive analysis as it involves the repeated observations of the same variables over a period of time. As the paper focuses on the top companies listed, though companies faced the uncertainty during that particular period of demonetization, they bounced back at the earlier than the MSME companies. Some sectors like FMCG, Pharmaceutical were immune to demonetization as it has an inelastic demand in the market and demonetization created giant opportunities for the software sector as the country has been shifted towards digitalization. Found short-term implications for the cash-intensive sectors but in the long run it helps in the growth of the economy, which in turn will have a positive correlation with the growth of companies.

Keywords: Demonetization, Liquidity, Corporates, MSME, Langitudinal