Wondering what Demonetization is really all about ? Just few hours before Trump’s victory was announced, the Prime Minister of India Narendra Modi, in an unscheduled live televised address at 8pm dropped a Bomb by demonetizing old currency notes of ₹ 500 & ₹ 1,000.
The demonetizing of ₹500 and ₹1,000 banknotes was a policy enacted by the Government of India on 8 November 2016, ceasing the usage of all ₹500 and ₹1,000 banknotes in India from 9 November 2016.
History of Demonetization in India
Demonetization is not new to India as these currency changes have been done before in 1946 & 1978. Rs 1,000 , Rs 5,000 & Rs, 10,000 notes were banned.
In 1946 Rs 1,000 and Rs 10,000 were demonetized and new currency of Rs 10,00, Rs 5,000, Rs 10,000
notes were made. These currencies were again banned in 1978 by Janta Party.
Indian government on Demonetization
Indian government stated demonetization as an effort to stop counterfeiting of the previously circulating banknotes allegedly used for funding terrorism from across border, as well as a crack down on black money in the country.
The move was also described as an effort to reduce corruption at various government departments as well as private industries, use of narcotics and drugs, and smuggling.
Impact of Demonetization in India
The demonetization has effected many sectors including private industries to real estates.
The Real estate has been affected a lot by this, as there is involvement of black money. 10 – 70% of the transaction were in cash. The cash payments include 80% of ₹ 1,000 & ₹ 500 notes.
By demonetizing currency there will be a check on the money and the prices of properties are expected to decline as all the transactions will be done in white.
Fake Indian Currency Notes:
There were many FICN notes floating around, which had badly effected the Indian economy . By demonetizing the currencies, all the fake money will now be nothing but piece of paper.
Political parties used to spend a lot of money for buying voters. They used to give free Liquors and cash to the poor people in favor of their votes. Demonetization has also effected them as they now will be having less money to spend.
Criticism of Narendra Modi for Demonetization:
Chief Ministers of several Indian states like Mamata Banerjee, Arvind Kejriwal and Pinarayi Vijayan have criticized and led major protests against the same.
Other than these CM’s,
- Nobel laureate Indian economist Amartya Sen,
- Former Senior Vice-President and Chief Economist of the World Bank, Kaushik Basu,
- Pronab Sen, former Chief Statistician and Planning Commission of India member,
- Prabhat Patnaik, a former professor of economics at the Jawaharlal Nehru University,
- Noted economist and journalist, T. N. Ninan and many other prominent names have opposed and criticized the current government’s move.
However, it is important to note that post demonetization, ₹ 25,000 crore has been deposited in cash in dormant bank accounts.
While Some top journalists of the country like Barkha Dutt, are trying to drag down Narendra Modi Government over “Demonetization”. Demonetization may seem hard to digest at first but is expected to help Indian economy in the long run.