Article on demonetization in india. Demonetization in India: What Happened and Why? 2022-10-22
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Demonetization in India refers to the decision of the Indian government to invalidate certain denominations of banknotes and replace them with new ones. In 2016, the Indian government demonetized 500 and 1,000 rupee notes, which made up 86% of the country's currency in circulation at the time. The move was announced by the Indian Prime Minister, Narendra Modi, in a surprise television address on the evening of November 8, 2016.
The main rationale behind the demonetization was to combat corruption, tax evasion, and counterfeiting. The government believed that the large amounts of undeclared wealth, or "black money," held in the form of cash would be rendered useless by the demonetization and would be more difficult to convert into new notes. The government also hoped to encourage more people to use the formal banking system and digital payments, which would increase transparency and make it easier to track financial transactions.
However, the demonetization had a number of unintended consequences. It caused widespread disruption and inconvenience for the general public, as people had to stand in long lines to exchange their old notes for new ones. Many small businesses and farmers, who relied on cash transactions, were also hit hard by the demonetization. The shortage of cash led to a decline in demand and a slowdown in economic activity.
In addition, the demonetization had only a limited impact on black money and corruption. While some people with undeclared wealth did lose a significant portion of their wealth, others found ways to convert their old notes into new ones or launder their money through the banking system. The government's own data showed that a large portion of the demonetized notes were eventually deposited into the banking system, suggesting that they were not undeclared wealth as the government had hoped.
Overall, the demonetization in India had mixed results. While it did achieve some of its intended goals, such as increasing the use of digital payments and bringing more money into the formal banking system, it also caused significant disruption and economic hardship for many people. In the future, the government may need to consider more targeted and less disruptive measures to address issues such as corruption and tax evasion.
Demonetisation: What India gained and lost
During the demonetization process, critics described it as poorly planned and unfair, while several others welcomed this drastic move to the Indian economy. There were six deals in 2013; 11 in 2014; 24 in 2015; and six in 2016. Arab Media Media in the Arabian Gulf published detailed reports about Indian housewives who were hurt by the note-ban. This is the regime under which other payment players have operated. If the objective was to register a permanent upward shift in the tax base, it failed miserably. Women, who get cash from their husbands to run the household, often hide tiny amounts in kitchen jars, tucked under mattresses, or stashed away in the dark corners of closets, making those their bank, it said. More importantly, black money is not really kept in cash except in small quantities but mostly accumulated through real estate and other assets.
Demonetisation: Impact, Pros and Cons of Demonetisation in India
In the currency exchange process, the government can catch those who have evaded taxes and retroactive tax their unreported earnings. Demonetisation in India occurred on 8 November 2016, with PM Narendra Modi announcing in the Live broadcast of the message on the National television channel. But for payment transactions, the success would depend on positive cross-side merchant network effects in the sense how widely the mobile money service is accepted by the retailers. Economic Journal of Developmental, 2010; 11-12 1-2 :124-134. Citizens were given 50 days 30 December 20016 to exchange or deposit the old currency notes to the nearby banks.
To write Demonetisation Essay in the UPSC Exam, candidates can download the Demonetisation UPSC notes from. To the credit of the government, this is being done on a continuous basis. The most striking excerpt I have seen is from The village barber said his daily income has dropped from 200 rupees a day to 50 because of the cash shortage caused by demonetization, though it is slowly recovering. The CMIE compared the employment data for January-April 2017 with the figures for the September-December quarter of 2016, when demonetisation was implemented. Infibeam, India first listed e-commerce company, is integrating itself with online payments platform CC Avenue.
Additionally, government representatives stated that demonetization was undertaken in an effort to reduce the dependence on cash for casual transactions and to lead to a more sophisticated economy. But in the long run, looking at the growth in GDP and digital transactions, it can be concluded that demonetisation has proven to be a positive decision toward uplifting the Indian economy. By every measure, demonetisation as economic policy was a gross failure. The fines were also imposed on the people carrying the old notes after 30 December 2016. In adopting the common currency, countries across Europe discontinued their currencies and introduced the euro as the standard across the Advantages of Demonetization Through the demonetization of currency, a country can receive benefits ranging from crime prevention to greater currency standardization.
Paved Way for Digital Transactions Demonetisation effectively turned India towards a cashless economy. Through the demonetization process, old banknotes and coins are discontinued and taken out of circulation, and effectively become worthless. During the demonetization process, critics described it as poorly planned and unfair, while several others welcomed this drastic move to the Indian economy. It is clear that where narratives succeed there is very little political cost. Disadvantages of Demonetization On the other hand, some disadvantages can arise from the demonetization process, including: 1.
Demonetisation: What is Demonetisation? Demonetisation Impact, Demonetisation in India
This step may have positive implications for tax revenues longer term. The currency was demonetizing first time in 1946, and second time in 1978. The printing did not start before October 2016. It is also reasonable to expect that 60% of Rs. The secondary data was collected from various published sources like reports, magazines, journals, newspapers etc.
Fino Paytech is a payments technology company. Increase in Tax-filers Demonetisation also had the effect of widening the tax-payers base. You don't need a Constitution bench to hear this matter," the bench, also comprising Justices B R Gavai, A S Bopanna, V Ramasubramanian, and B V Nagarathna, said. The Congress and other Opposition parties held protests against demonetisation in post-note ban period. It is very embarrassing for this court," Justice BV Nagarathna of the Constitution bench remarked, even as it accepted the request and posted the matter for hearing next on November 24-25. In 2017-18, the amount spent on printing notes stood at Rs 4,912 crore.
It needs to be repeated periodically. The New York Times Financial analysts hailed demonetization as a bold and potentially transformational decision for India, the New York Times said. People also wanted smaller currency notes to serve their daily needs. As we observe six years of this epic failure, it is important to remind the PM about the ill-conceived calamity which he thrust upon the nation," Kharge said. However, this period was accompanied by a prolonged cash shortage and a noticeable disruption across theeconomy, particularly in the unorganized sector. While some support the courageous move, other economists believe that demonetization has failed to meet its goals in many areas.