Demonetization is the process of removing the old currency units and replacing them with new notes. Whenever, there is a change of currency, old currency and notes will be replaced with the new currency notes and denominations. The first demonetization has taken place in the year 1978 under the guided leadership of the Janata Government. The currencies that were phased out were the INR 1000, 5000 and 10,000 notes. India has experienced the demonetization from early times and one can always take the development in a very positive way.
Cause For Demonetization
Demonetization is the bold move done by the government of Mr. Narendra Modi on November 8, to counter the flow of black money, counter tax evasion, and eliminate counterfeit currencies, corruption and smuggling in the economy. Impact of demonetization has been very good after INR 500 and 1000 were withdrawn with immediate effect on Nov 8, 2016. The move has been welcomed by people from various walks of life ranging from common man, executives, IT professionals and businessman.
Impact Of Demonetization For The Future:
- Demonetisation has got a very positive response from people from various walks of life.
- However it also comes with the pain, people are angry, agitated, losing temper, fighting and devastated with the demonetization drive.
- Supreme Court intervened and ordered the government to phase out the old cash immediately, replace with the new ones and recalibrate the ATM’s.
- The positive approach to this bold move will lower the inflation making the products available to the common man at reasonable price.
- All black money transactions will be under the scrutiny of IT departments
The use of debit/credit cards, mobile banking, net banking and online payments has increased rapidly, thereby reducing the queues to a great extent. Online applications has come to the picture like
According to one official from ICICI Bank, “Online transactions have increased by 80% and this is a good sign.” People who use cash based financial transaction in India are more compared to people using the debit and credit cards. The cash based transactions have come to an end. At present the government is struggling to print and replace new notes. Duplicate currencies are being made by note printing press in Pakistan and demonetization has put an end to that. Services like the Medical facilities, Healthcare, Higher Education, Fruits and vegetables, Groceries become dearer and the common man will be hit. Consumption of various commodities will also be hit in India.
The worst hit will be the daily wage earners, as they will not receive the new notes and will go to the banks to exchange the old INR 500 and 1000 notes. The major challenge will be the recalibration of the ATM machines all over the country. Maharashtra and Gujarat has 80 banks for approx 100 villages in India and states like West Bengal, Bihar, UP, Orissa has ten banks for approx 100 villages. Banks, both private and public will have to take lot of initiative and make a pan India presence to make demonetization drive of the NDA government a grand success.
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