Article on demonetization in india. Demonetisation: Impact, Pros and Cons of Demonetisation in India 2022-12-31
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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.
Demonetization in India: What Happened and Why?
Small notes will rapidly lose further value so that essential goods cannot be purchased with a reasonable quantity. It will quickly overcome the short-term slowdown. The Across time, the impact Narratives are often intertwined in the cultural belief systems of the society. 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. This was accompanied by other measures, such as the incentivizing of digital transactions to ease the transition period of changing and re-circulation of notes. Jaitley admits it will take two-three weeks to reconfigure the ATMs to handle the newer and larger notes.
At least in this instance, there would seem to be a measure of justice if the rich really did suffer more. It is the act or process of removing the legal status of currency unit. It needs to be repeated periodically. These notes were to be deposited in banks as soon as possible and the last date that was given for it was 31 st December 2016. However, this period was accompanied by a prolonged cash shortage and a noticeable disruption across theeconomy, particularly in the unorganized sector. The share of high denomination currency notes was 86. Meanwhile, expensive marriages were called off.
For the online retail market, gross merchandise value GMV of players fell by 40-50% in first few weeks after demonetization, in the middle of their biggest quarter for sales. It has not applied for a payments bank license. The move will bring sustainable improvement to the economy by boosting cash-less transactions and strengthening the banking system, the survey report said. Agreements with many countries, including the U. The RBI had spent Rs 3,421 crore on printing currency notes a year ago, that is, in 2015-16 July to June cycle.
Mobile Money in India: Does Digitalization Follow Demonetization?
The Demonetization Process Demonetization is a form of economic intervention, where a country moves to replace one form of currency with another. No shopkeeper would give change for Rs500. Most tended to distinguish the intention from the reality. It is the stuff of epics. Things may remain bleak till March. While announcing demonetisation on November 8 in 2016, Prime Minister Narendra Modi had outlined three broad objectives to fight black money, corruption and terror funding.
Tax revenue for 2016—2017 has increased as a result of demonetization and the tax amnesty scheme. On specific companies, it notes that as of September 2016, Paytm had 140 million wallet users with 75 million to 90 million monthly transactions. One had various positive impacts, such as digitalizing transactions, decreased terror activities, etc. But the Journal also warned about the possibility of a slowdown hitting the economy. The RBI says, "Compared to the previous year, there was an increase of 35 per cent in counterfeit notes detected in the denomination of Rs 100, while there was a noticeable increase of 154.
Demonetisation: Impact, Pros and Cons of Demonetisation in India
However, for sectors like real estate, a notorious hotbed for black money transactions, there will likely be disinflationary pressures short term, with prices being pushed downward before they stabilize longer term. Countries with such bodies have achieved high growth rate, it said. 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. The first was when Rs. In the ideal situation, there will be a strong international player that ends up dominating the market. As the black money goes out of the system the money supply will shrink to some degree.
Demonetization in India: This is how the world media reacted
This transparent way of transacting leads to more tax payments and less untaxed money circulating in the market. Demonetisation appears to be the spoiler-in-chief for the RBIs profit. Airtel Payments, Paytm, India Post Payments which launched a pilot project earlier this year , and FINO PayTech were the early starters. The Alibaba China -backed Paytm has also signed a non-exclusive term sheet to acquire rival FreeCharge, the Snapdeal digital payments platform. Also Read Over 99 per cent demonetised currency returned to banks: RBI report WATCH. On 8 th November 2016, the government of India, announced demonetization of 500 and 1000 rupees notes from the midnight of the same date. The wealth, representing ill-gotten gains, is perceived to be accumulated invariably in stacks of currency notes and gold, hoarded in safes, boxes, or ingeniously concealed cupboards.
Demonetisation: What is Demonetisation? Demonetisation Impact, Demonetisation in India
Perhaps the most telling evidence of the failure is that the cash-in-circulation has now exceeded pre-demonetisation levels. Indeed, there was satisfaction in being told that the rich had it worse. This was not the first time India has undertaken demonetization. The currency printing machinery had to run overtime to meet the targets. Demonetisation Process The process of demonetization is a lengthy process. Another survey by the Hong Kong-based technology market analysis firm Counterpoint says about 300 million of those subscribers use smartphones. The secondary data was collected from various published sources like reports, magazines, journals, newspapers etc.
Over 100 lives were lost. Demonetization refers to the process of stripping a currency unit of its status as a legal tender. Was demonetisation a success or failure? However, the way the narrative was framed made it hard for critics to explain their opposition. The second is aggressive promotion to drive platform adoption on both sides — mobile users as well as merchants — with discounts, loyalty rewards and advertising. I want to pay all my taxes in India and elsewhere.
During the process, people are given time to exchange their existing banknotes and coins for the new currency before it is officially discontinued. Demonetization, then, was inevitable; the only surprise being when. After the demonetization some sectors not affected like Pharma, FMCG, Education, Agriculture, Hospitals, Energy and Telecommunication From an equity market perspective, this move would be positive for Banking and Infrastructure sector in the medium to long term. The Cashless India program and website is of more recent origin. The unemployment rate stood at a four-year high from 2016 to 2017 when demonetisation was undergone. It also forces anti-social units to find ways to get rid of the old notes. The act of demonetisation was an act of collective sacrifice.
