Demonetization Pdf – Pros and Cons of Demonetization Rs500,1000-Hello friends Welcome To StudyDhaba.com .Here We areSharing Some important Points About -Demonetization Pdf – Pros and Cons of Demonetization Rs 500,1000 . Essay on demonetise in india .Demonetization is a very bold Decision taken by Indiangovernment for Curbing all Black Money in India . Major Aim ofDemonetization is Making India A Cash less Society .All Details and information is given below .Demonetization Pdf– Pros and Cons of Demonetization Rs 500,1000 . Demonetizationis a step to make india a cashless society.
Important Points Covered In This Post :
What is Demonetization ?
Pros and Cons of Demonetization ?
Demonetization Effects on Indian Economy ?
Why Indian Government Banned Rs 500 and Rs 1000 Notes ?
What Are The Causes of Demonetization ?
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What Is Demonetization ?
Demonetisation is a process by which a series ofcurrency will not be legal tender. The series ofcurrency will not acceptable as valid currency. The samething happens with theRs. 500 and Rs. 1000 notedemonetization
What are the causes ?
There can be many causes of Demonetisation in anyeconomy some of them are : Introduction of New Currency,Black Marketing, Currency Storage, Corruption andothers.
On 8th November 2016, Government of India had announced that from today onward rupees 500 and 1000 rupee notewill not be a legal tender.
This means that 500 and 1000 rupee note will be accepted by anyone except the organisation declared by government.
They can change the currency from the banks and postoffices till 30th December 2016.
Demonetization History Background In India ?
This is not The First time When Indian Currency is Demonetised In India .
The first instance was in 1946 and the second in 1978 when an ordinance was promulgated to phase out noteswith denomination of Rs 1,000, Rs 5,000 and Rs 10,000.
The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000 note in 1938 and again in 1954.
But these notes were demonetized in January 1946 and again in January 1978, according to RBI data.
Rs 1,000 and Rs 10,000 bank notes were in circulationprior to January 1946.
Higher denomination banknotes ofRs 1,000, Rs 5,000 and Rs 10,000 were reintroduced in1954 and all of them were demonetized in January 1978.
The Rs 1,000 note made a comeback in November 2000. Rs 500 note came into circulation in October 1987.
The move was then justified as attempt to contain the volume of banknotes in circulation due to inflation.
India has carried out demonetization exercises twice before, in 1946 and 1978. In Jan 1978 episode, currency worth INR 1.46 bn (1.7% of total notes in circulation was demonetized. Of this INR 1.0 bn (or 68%) was tendered back. In 1978 the value of demonetisation was very small (only 0.1% of GDP).
Indian Currency Demonetization
Important Facts About Indian Currency and Demonetization
However, this is the first time that Rs 2,000 currency note is being introduced.
Bank notes in Ashoka Pillar watermark series in Rs 10 denomination were issued between 1967 and 1992, Rs 20 in 1972 and 1975, Rs 50 in 1975 and 1981 and Rs 100 between 1967-1979.
The banknotes issued during this period contained the symbols representing science and technology, progress and orientation to Indian art forms.
In the year 1980, the legend Satyameva Jayate — ‘truth alone shall prevail’ — was incorporated under the national emblem for the first time.
In October 1987, Rs 500 banknote was introduced with the portrait of Mahatma Gandhi and Ashoka Pillar watermark. Mahatma Gandhi (MG) series banknotes – 1996 were issued in the denominations of Rs 5, (introduced in November 2001), Rs 10 (June 1996), Rs 20 (August 2001), Rs 50 (March 1997), Rs 100 (June 1996), Rs 500 (October 1997) and Rs 1,000 (November 2000).
The Mahatma Gandhi Series – 2005 bank notes were issued in the denomination of Rs 10, Rs 20, Rs 50, Rs 100, Rs 500 and Rs 1,000 and contained some additional/new security features as compared to the 1996 MG series.
The Rs 50 and Rs 100 banknotes were issued in August 2005, followed by Rs 500 and Rs 1,000 denominations in October 2005 and Rs 10 and Rs 20 in April 2006 and August 2006, respectively.
What is Impact of Demonetisation? What are Pros and cons of demonetization in India ?
Attack On Black Money Holders
People who possess huge amounts of black money in hard cash are at a complete loss now .
Their black money in hard cash is now a pile of trash.
Now If a Black money holder Want to Deposit Money in Bank Account Than he/she Has to Show ID .
There Will Be 200 % Penalty On Income tax Amount .
Death Knell To Fake Currency Rackets
Most of the fake currencies used to be be in the denominations of Rs. 500 and Rs. 1000 .
By banning Rs. 500 and Rs. 1000 notes, Modiji has busted all these unethical rackets completely .
Now There Will be no use These Money
End Of Terrorist Funding
Huge sums of money especially in hard cash in the denominations of Rs. 500 and Rs. 1000 was used to fund Islamic terrorists , Naxalites and other non-state actors
Now , these Organizations will suffer from shortage of funds .
Most of These terrorist ,Maoist Organization Used These Funds For Buying Arms and Weapons
Buying arms is an extremely difficult task now after this ban .
Online transaction = More transparency = Financial Intelligence Unit Will tack All Online transactions
Now there Will be More Transparency In Real Estate Sector
End of Huge Donations
Huge amounts of donation that is taken in the private education and healthcare sectors would be stopped .
Schools, engineering and medical colleges and hospitals ( private ones) used to take huge amounts of money as donations especially in the form of hard cash in the denominations of Rs. 500 and Rs. 1000 .StudyDhaba.Com
These money-minded people running these institutions won’t be able to make any easy money now .
Same applies to the real estate sector.
Towards A Cashless Economy
While it is practically impossible to have a 100% cashless economy , the proportion of hard cash in the economy will decrease and our economy will get more digitized .
This will result in greater transparency .
Now government has put Some limitation for Cash Withdraw from bank Accounts. People Will go for online payments ,They Will Use PayTM Or other Online payment Companies For Buying goods or Making payments.
More Use of Debit and Credit Card
Hawala Transactions End
Most Hawala transactions used to be carried out in the denominations of Rs. 500 and Rs. 1000 .
With this ban , Modiji has delivered a fatal blow to the unethical Hawala traders as they can’t trade anymore using denominations of Rs. 500 and Rs. 1000 .
Cons of Demonetization – Here Is the List of Cons of Demonetization
Rush At Banks
Banks will be extremely over-crowded by people .
People will forget everything else and throng to the places where the banned notes are being officially exchanged leading to a tremendous chaos .
Shortage of Money To Common People
There Will be Shortage of Money For Common people .
Due to currency being sucked out of the market coupled with Trump’s victory, the mood at the stock market was completely bearish .
Sensex lost 1600 points at open . This can adversely have a negative effect on trade in general .
Problem For House Wives
Many Indian housewives store money secretly so that they could be of help during times of financial crisis in their households .
The accumulated money of our respected Indian housewives is of no use now until they exchange in the banks and post-offices .
Short Term Inflation
Due to shortage of money in the market , a short-term cost push inflation will occur .
The price of gold has already become sky high .
Prices of vegetables and fruits have also soared burdening the common man .
Difficult For Those Families those have Weddings.
Impact of Demonetization on Indian Economy
Effects on Parallel Economy
The removal of these 500 and 1000 notes and replacement of the same with new 500 and 2000 Rupee Notes is expected to – remove black money from the economy as they will be blocked since the owners will not be in a position to deposit the same in the banks
Temporarily stall the circulation of large volume of counterfeit currency
It would curb the funding for anti-social elements like smuggling, terrorism, espionage, etc.
Effects on Money Supply
With the older 500 and 1000 Rupees notes being scrapped, until the new 500 and 2000 Rupees notes get widely circulated in the market, money supply is expected to reduce in the short run.
To the extent that black money (which is not counterfeit) does not re-enter the system, reserve money and hence money supply will decrease permanently.
However gradually as the new notes get circulated in the market and the mismatch gets corrected, money supply will pick up.
Effects On Demand
The overall demand is expected to be affected to an extent. The demand in following areas is to be impacted particularly:
Real Estate and Property
Gold and luxury goods
Automobiles (only to a certain limit)
All these mentioned sectors are expected to face certain moderation in demand from the consumer side, owing to the significant amount of cash transactions involved in these sectors.
Effect on Prices
Price level is expected to be lowered due to moderation from demand side. This demand driven fall in prices could be understood as follows:
Consumer goods: Prices are expected to fall only marginally due to moderation in demand as use of cards and cheques would compensate for some purchases.
Real Estate and Property: Prices in this sector are largely expected to fall, especially for sales of properties where major part of the transaction is cash based, rather than based on banks transfer or cheque transactions.
Effect on GDP
The GDP formation could be impacted by this measure, with reduction in the consumption demand.
However with the recent rise in festival demand is expected to offset this fall in overall impact.
Moreover, this expected impact on GDP may not be significant as some of this demand will only be deferred and re-enter the stream once the cash situation becomes normal.
Effect on Online Transactions and alternative modes of payment :
With cash transactions facing a reduction, alternative forms of payment will see a surge in demand.
Digital transaction systems, E wallets and apps, online transactions using E banking, usage of Plastic money (Debit and Credit Cards), etc. will definitely see substantial increase in demand
This Will Bring More transparency In System And You can Easily track Online Money Transactions.Demonetization Pdf – Pros and Cons of Demonetization Rs 500,1000
Will demonetization slow down India’s growth?
Yes, Demonetisation will slow down growth rate in short term and medium term because people have less money in hands. So demand is low, that is why it is hampering our growth rate. But as soon as people get money, markets will be back on track.
But its long term gain is “fictional” or say “disputed”. Some people theoretically says it will benefit the economy as government will have more revenue but others say giving a electric shock to the economy when its already under distress business sentiment can send it into coma.
India is a cash based economy and demonetization will temporarily decrease liquidity in this economy. Decreased liquidity will lead to decreased demand which will result in decreased productivity causing a slowdown in consumer market.
People have panicked due to sudden demonetization. This will force them to save and store more money. Thus, a decrease in demand leading to slowdown in consumer market.
Demonetization Pdf – Pros and Cons of Demonetization Rs 500,1000
Does the demonetization in India really help in recovering black money?
Was demonetization really effective to recover black money?
What will be the next blasting move by PM Modi?
What effect of black money will fall on fixed rates?
Is demonetization a good way to curb black money?
What will media do with their black money after demonetization?
How will the demonetization lower the black money?
What is the purpose of Demonetization? How does it convert black to white money and whom does it serve?
Did the recent (2016) demonetization in India clear out all the black money? What’s a way to measure the effects of this monetary policy?
How would demonetizing 500 and 1000 rupee notes and introducing new 2000 rupee notes help curb black money and corruption?