Breaking down the question
This twenty-mark question is deliberately layered. The first part is evaluative — did demonetization accelerate economic growth? — and the examiner expects a reasoned, evidence-led judgement rather than a simple yes or no. The second part is the sociological core: it asks you to read demonetization through three interlocking lenses — the informalization of labour, underemployment, and gender discrimination. The phrase in this context binds the two parts, so your answer on labour must flow directly from your assessment of the economic shock.
Note that the question sits under industrialisation and urbanisation. The examiner wants you to treat demonetization not as an economic policy in isolation but as an event that exposed the structure of the Indian workforce — overwhelmingly informal, casualised and unevenly gendered.
How to approach it
Open by assessing the growth claim honestly. Acknowledge the stated aims — curbing black money, widening the tax net, pushing digitalisation — and then weigh them against the disruption to the cash-dependent informal economy. A balanced verdict is stronger than partisanship either way.
Then pivot to the sociological analysis. Treat informalization, underemployment and gender discrimination as three connected effects, using the informal sector as the connecting thread. Draw on scholars of informal labour and close with a reflection on what the episode reveals about the structure of Indian work and the road ahead.
Model answer
Whether demonetization accelerated economic growth is, at best, doubtful. Announced in November 2016, the withdrawal of high-value currency was justified as a strike against black money, counterfeiting and the financing of illicit activity, and as a spur to digital transactions and formalisation. Some of these aims produced modest, uneven gains — a temporary widening of the tax base and a lasting push towards digital payments. Yet the Indian economy is overwhelmingly a cash economy at its base, and the sudden removal of liquidity fell hardest on the very sectors where growth and employment are concentrated. Rather than accelerating growth, the shock disrupted production, trade and daily wage work for a considerable period.
The deeper sociological significance lies in what demonetization revealed about the structure of labour. The overwhelming majority of India's workforce is located in the informal sector — construction, petty trade, domestic service, small manufacturing and agriculture — where wages are paid in cash, contracts are absent and social protection is negligible. Jan Breman's studies of footloose labour describe precisely this world of casual, mobile and insecure work. When cash vanished, informal employers could neither pay nor retain workers, and the informalization of labour deepened as formal jobs contracted and workers were pushed further into precarious, unprotected arrangements.
Underemployment intensified as a direct consequence. Underemployment in India is chronic — millions work fewer hours, or at lower productivity, than they could or would wish. The liquidity shock reduced the volume of work available in cash-dependent trades, so labourers who had migrated to towns and cities found demand for their labour shrinking. Barbara Harriss-White's work on the India of the informal economy shows how such shocks ripple through dense networks of small enterprise, and demonetization illustrated this vividly, as reduced circulation of money translated quickly into reduced days of work.
Gender discrimination sharpened the impact further. Women are disproportionately concentrated in the most vulnerable segments of informal work — home-based production, domestic service and unpaid family labour — and often lacked independent access to banking. Many households held savings in cash kept by women, and the compulsion to disclose or deposit it exposed them to loss of autonomy. Where employment contracted, women were frequently the first to be released, reflecting the entrenched assumption that men are the primary earners. The episode thus laid bare how economic shocks are never gender-neutral but are refracted through existing hierarchies.
Taken together, these three effects reveal a labour force whose informality, insecurity and gendered division made it acutely exposed to a monetary shock. Demonetization did not so much create these conditions as expose them. Understanding this exposure is essential to any policy response, and it points towards the extension of social security and formalisation as protective measures. The link between informal work, child labour and the absence of protection is explored further in the notes on the informal sector and child labour.
The considered conclusion, then, is that demonetization did not accelerate growth in any convincing sense, and that its costs were borne most heavily by informal, underemployed and female workers. Its lasting sociological lesson is that the health of the Indian economy cannot be separated from the security of those who labour at its informal base.
Examiner's perspective
Examiners reward a script that resists the temptation to treat demonetization as a purely economic or political question. The strongest answers deliver a measured verdict on growth and then move decisively into the sociology of labour, keeping informalization, underemployment and gender discrimination clearly distinguished yet connected. Citing scholars of informal work such as Breman and Harriss-White demonstrates conceptual command, and grounding claims in the cash-dependent structure of Indian employment shows that you understand why this population was so exposed. A conclusion that links the analysis to social protection lifts the answer into the top band.