Demonetization: Good or Bad?

On Nov 8,2016 Prime Minister Mr. Narendra Modi announced that all the old currency of Rupees 500/- & 1000/- will not be the legal tender. It was a huge surprise for everyone. At first people didn’t understand that what actually had happened? Then Mr. Modi announced that government is now going to issue new notes of 500/- and 2000/- and the old 1000/- rupees note has now completely banned. It was a very big step taken by the Indian government and definitely it was going to affect the lives of 132 crores peoples living inside the nation. People from across the nation started giving their reviews about the demonetization and how would it be beneficial for the nation.

Demonetization was such a kind of step about which the government couldn’t afford to tell anything before because if they did so people having black money would definitely find some ways to store them that’s why I think Mr. Prime Minister has announced it all of a sudden which I think is right but at the same time the government should have done some preparation so that the people would not had been suffered like they did. The new note’s dimension was different from the old one. It is little big in size. And the government realized it later on and then the ATM’s was instructed to change the cabinet in which the note is stored. If this things would had done before demonetization then I think people might have suffered less. Anyways. Every coin has two aspects so let’s discuss some pros and cons of the demonetization pointwise.

Limitations

· At the time when demonetization was happened, The world was growing very faster but we slowed down due to the demonetization. Our GDP fell by 0.09% in the first quarter.
· People faced a lot of difficulties while changing their notes due to the massive rush. Especially the merchants and traders suffered a lot as the demonetization has affected the whole market. Daily wage labours were left unpaid due to the scarcity of the new notes in the market.
· Even after the demonetization the number of fake currencies has increased by 50%.
· It took near about 8 thousand crores in printing the new notes.
· The cashiers working in the bank had also very much suffered as they have to work from 10 in the morning to 11 in the night and due to the very less time provided by the government for preparation, the banks did not manage to get cash counting machines and due to this a lot of cashiers face difficulties in counting the cash and not only that many cashiers had to pay fine ranging from Rs 1000 to Rs. 2.5 Lakhs due to some miscounting(due to heavy work load) of such a huge amount of cash.
· The demonetization was done for 15 crores 41 lakhs rupees and A/c to the government near about 2-3 lakh crores rupees will not come in the banking system and in this way those money will be eliminated from the system as Black Money but A/c to the reports issued by the RBI only 10 thousand crores have not come in the banking system means 99.3% money has come back.

Positives

· After demonetization the government also come to know about the unaccounted wealth. Near about all the wealth has now come in the banking system and which was seen as a drawback before now has become a plus point why because all those unaccounted wealth has and become taxable and due to this income tax payment has increased in an enormous amount.
· Demonetization helps in boosting digital economy of the country. People understand the benefits of digital payment and started using debits cards, e-wallet etc. The government has also launched a very effective payment method called UPI Payment (BHIM: BHARAT INTERFACE FOR MONEY)
With the help of UPI, now people can send money within a fraction of second. And even a small merchant or a chaiwallah or a subjiwala has also started taking digital payments. This is the positive impact of nothing but demonetization. Through demonetization we are also working to achieve a dream of becoming a DIGITAL INDIA.
· Number of tax payers increased from 1-2% to 4-5%. This results in increasing tax revenue by 25%.
· Due to the demonetization, the terror funding have stopped in the Kashmir valley and stone pelting has now reduced by 75% in Kashmir and not only this but Naxal activities has also reduced by 25%.
· Near about 3 lakhs fake companies has shut down.
· Bank loans and real state has now becomes cheaper than before.

Conclusive Remark

Demonetization is a very good idea in a longer run but it has short term teasing effect and it could be done in a better way if the government would had planned it in a nice way. People would suffer less, Comparatively.