DEMONETIZATION IN INDIA

 

DEMONETIZATION IN INDIA (November 8, 2016)

 On November 8^th, 2016 prime minister Narendra Modi announced to the nation about the demonetization of Rs. 500 and Rs. 1000 currency notes of Mahatma Gandhi series.

After the announcement of demonetization, all the currency notes of Rs. 500 and Rs. 1000 left invalid in the circulation. It was also announced that the new currency notes of Rs. 500 and Rs. 2000 of Mahatma Gandhi series will be in circulation soon. And with these series of notes, the old one would be exchanged.

This announcement of demonetization left all the country stunned. This decision caused a sensation in the whole country. Social media was flooded with messages and information. People started counting the trash they had accumulated for years in an illegal way.

Not being surprised, there were strong reactions both in favor of and against this unaccepted move. All people who are away from malpractices welcomed the move with full support.

The objective stated by the government behind this move was to curb the black money circulating in the economy and stop the use of fake and factitious cash in illegal ways.

This sudden and unaccepted demonetization move was criticized badly and met with protests, litigation, and strikes. This decision resulted in shortage of cash for weeks in the economy and led to significant disruption to the whole economy.

The above three lines were a glimpse of the after effect of demonetization. Now let’s see what actually happened.

ñ              First, a severe cash shortage was faced.

ñ              At the time exchanging old currency notes with new notes people had to stand in long queues.

ñ                Also, no. of deaths got linked with due to the exchange of notes in banks.

ñ               As the shortage of cash started growing, the media and the economist also started criticizing the demonetization move.

ñ            The next day after the demonetization announcement, the BSE Sensex and Nifty 50 stock indices fell more than 6%.

ñ             Not the higher class and not the lower class, the problem faced by in high extent was by the middle class.

ñ         Many economists have given their views that the 2000 notes will be much easier to hide in the form of black money.

 

ñ        Many poor regular wage workers are jobless and their everyday income has ended because owners are incapable to pay their daily payments.

ñ          Also, the entire opposition opposed and stood against the decision

 

Appreciation –

ñ        In spite of facing problems by demonetization people also appreciated the move.

ñ         Started Showing their faith in the objective i.e., to eliminate the black money from circulation and make the country corruption-free.

ñ        Also, the government recited more economic growth avenues and agenda by removing factitious money from the channel.

ñ        Prediction of economic growth of 7.6 % during the year 2018-19 which would be considered as the higher than Global economic growth rate has also shown a ray of hope to the people for a glorious economy.

ñ        Also, the stated long-term benefits of demonetization resulted in coming out as a right decision

 

 

TERMED AS RIGHT DECISION-

This decision has been termed as the greatest financial reform that aims to curtail the circulation of black money in the economy and corruption in the system.

As a result of demonetization people will opt to save their money more in  the bank instead of keeping them at their home.

The biggest achievement of demonetization would be seen in curbing and lowering the terrorism activity, as this movement will put an end to the funding to the illegal activities that are growing due to unaccounted fund flow.

Also, the problem of money laundering will be cured.

Now people can be able to use their Jan Dhan Yojna accounts. Citizens of India will now be able to deposit their money balance under this plan and then can be used for the development of the country.

Tax collected by this move will be now out in use for countries development

This demonetization activity will now push people to pay income tax to the government.

It is a large step toward the desire of creating a digital India. Demonetization has driven the country towards a cashless community. All the financial transaction has to be within the banking procedure.

More circulation of money will lead to more collection of tax.

Demonetization will give a check to the increasing inflationary pressure on the economy, the post-demonetization era will result in making living possible for low-income groups.