Effects of Demonetization, GST & Covid-19 Pandemic in the Adoption of Digitalization by Rural MSMEs in India

Received: 27 Mar | Revised: 19 July 2021 | Accepted: 4 Sept 2021

Vol 29, Issue-3, July-September, 2021

Abstract The turbulent times created by the recent uncertain events give only two solutions – either surrender or fight-out. It has been the story so far for the MSMEs in India. Three events that changed the business scenario include the implementation of demonetization & GST and the pandemic-related restrictions. Survival became the only viable factor for businesses. This study dwells deeper into these three events and their influence on the adoption of digitalization by MSMEs in rural India. Methodology: Responses of the rural MSME owners were collected through a structured questionnaire containing multiple-choice questions on a 5-point Likert scale. To have better clarity, responses of 274 rural MSME owners were finally considered for the data analysis. For factor analysis of the data, the process of Principal Component Analysis (PCA) was adopted with the help of IBM SPSS 25.0. To find out the validity of the model, Structural Equation Modelling (SEM) was performed by using IBM AMOS 21.0. Download View

Keywords: Demonetization, GST, Pandemic, Covid-19, Digitalization, Vocal for Local, MSME


Acs, Z. J., & Audretsch, D. B. (1990). Innovation and small firms. Cambridge: MIT Press. Almeida, F.,Duarte Santos, J., and Augusto Monteiro, J. (2020). The Challenges and Opportunities in the Digitalization of Companies in a Post-COVID-19 World, IEEE Engineering Management Review, vol. 48, no. 3, pp. 97-103.

Anderson, J.C. and Gerbing, D.W. (1988), “Structural equation modeling in practice: a review and recommended two-step approach”, Psychological Bulletin, Vol. 103 No. 3, pp. 411-423.

Arasti, Z. (2011). An empirical study on the causes of business failure in Iranian context. African Journal of Business Management, 5(17), 7488–7498.

Ashwini, Sahoo P., “Here’s what the impact will be of Rs 500, Rs 1,000 note ban: A massive change in informal cash-carry system to formal financing”, Financial Express; 2016 Nov 10.

Badam, D., and Gochhait, S. (2020). Digitalization and its Impact on Indian Economy, European Journal of Molecular & Clinical Medicine, Volume 7, Issue 06, 2020.