Demonetisation

Demonetisation means that the Reserve Bank of India has withdrawn the old currency note of certain denomination as a official mode of payment.

On November 8, 2016, Prime Minister Narendra Modi in a surprise announcement said the existing higher denomination currency (Rs 500 and Rs 1000) will cease to be legal tenders. The PM said this is government’s biggest push to fight black money and end corruption; he also said that those with huge amount of black money will try to kill him, but he will not take back the decision. The opposition, however, criticised the government for poor implementation of the scheme and said a lot of people have died standing in queues trying to get their hands on the new currency.

The government also introduced new Rs 500 and Rs 2000 notes and urged people to move towards cash-less economy, a first for India. But the opposition has been protesting the government’s decision, even stalling Parliament. A ‘Jan Aakrosh Diwas’ was observed by Left and other major parties, but it lost the steam due to a divided opposition.

This is not the first time that demonetisation has been implemented in India. In 1936, Rs 10,000 which was the highest denomination note, was introduced but was demonetised in 1946. Though, it was re-introduced in 1954 but later, in 1978, then Prime Minister Morarji Desai in his intensive move to counter the black money, introduced The High Denomination Banks Act (Demonetisation) and declared Rs 500 , Rs 1000 and Rs 10,000 notes illegal.

A lot of analysis in India and abroad claimed that demonetization of November 8, 2016,failed to do what it was supposed to do and its impact is turning out to be more protracted than initially expected.

And even from the point of view of promoting digital money, the government need not have put 86 per cent of all currency out of circulation, said Kaushik Basu, C. Marks Professor of International Studies and professor of Economics at Cornell University.

Basu, who was Chief Economic Adviser to the Indian government in 2009-12 and Chief Economist of the World Bank in 2012-16, pointed out that very little black money was caught.

The Reserve Bank of India on August 30, 2017 released its report on demonetization. In the report, it said 99 percent of the banned notes came back into the banking system which trashes all claims of Prime Minister Narendra Modi that the move will flush out the black money and counterfeit currency.
But according to the RBI report, Rs 15.28 lakh crore out of the Rs 15.44 lakh crore in the currency that was ceased to be legal tender on November 8, 2016, has come back into the Indian banking system.

With 99 per cent currency back in the system, the failure of demonetization hints two things, either the black money held in cash was very low or the government failed to implement the demonetization efficiently and all the black money held in Rs. 500 and Rs. 1000 bank notes laundered back to the banking system.

Advantages :-

Lots of people have supported this decision and few of people are not agree because they have black money, Poor and middle class people are happy and they don’t have any tension as they don’t have black money, this decision is painfully for businessman who have lots of black money. Even it was  render that people can get the best out of it and can even be more which are as under :-

Large loss of Black money:- This conclusion is pain in the ass for black money owners having vehicles of cash undeclared and experiencing without spending any tax. More and more businesses will be sorted those who accept paper money only such as small jewelers, hotels etc.

End of Fake currency racket:- If applied properly and successfully then it will outcome in end of fake currency noise as most of the fake racket are of Rs500 and Rs1000 but later scammers will create fake Rs2000 observe.

Hurdle for terrorism:- As said by PM Modi “From across the border, our enemies operating racket in India through bogus currency”, We all know he was refering to Pakistand and Chinese suppliers so this choice will put obstacle in their direction. Funding for arms, smuggling, terrorism will take a blow. This is most important advantage to the country.

Decrease in corruption for few months:- Shameless damaged tratiors will discover other techniques but it will devote some time.Like overseas bitcoins,online problems are used for crime cash but it will take sometime.

Fair Election:- we all know how much black cash is used by governmental events at least for future 5 condition election it will be very challenging process to use vehicles of cash in selection like EC captured in Tamilnadu.

Increasement in plastic money like debit card, credit card, online transactions. More and more people do transactions online so there will be no black money.

There will be very good opportunities will open up for poor and middle class people.

Disadvantages / drawbacks 

Although people supported but there was lots of hurdles for impact to keep in force of demonetization which are as under :-

Inconvience to people:- load in trading notices to comman individuals.

Elimination to comman Individuals :- lots of Indian have fake currency that it accidental or earned by effort and they are using it without knowing it. Now banks will refuse to take fake money it direct loss for innocent people.

Lack of Tax Payers Cash :- Rs 500 prnting expenses Rs 2.5 and Rs.1000 expenses Rs 3 , (approx ).Multiply it by number of 500 and 1000 notes present in India ;now govt has to pay these funds from tax payers.

Preliminary increase of corruption:- think about this, you have paas Rs. 1 lacs you go to return, cashier said “sab nakli hai bhai/ben! line se hat baki bhi khade hai””,then you are attached, whether it is bogus or not.

Abroad travelers:- Abroad travelers who may not be visiting India in the near time might suffer. Though they can exchange cash from airport.

It might impact individuals/businesses who accept/use money only. For e.g. if someone is planning a wedding next 7 days then money dealings including Rs. 500 & 1000 notices won’t be approved. This might impact individuals and economic system might get destabilize for a while.

CONCLUSION

Personally i think that It is a very strong decision by Modi and it’s success highly depends on it’s implementation so I would like to appeal every Indian to contribute for it and support to government. Everything will be fine soon for sure, initially it will painful to everyone but it will take few days and everything will be fine as usual in keeping the track of monetary aspect.