DEMONETISATION: GOOD OR EVIL?
Demonetisation refers to discontinuing of
current currency units and replacing those with new currency units. It is a
major decision and impacts all the citizens of the country because the value of
the currency held by the public loses value overnight unless you exchange it
with new currency units or deposit it in the banks.
It is a transformational
decision taken by the government to ban Rs.500 and Rs.1000 notes from
circulation in the market. In consequence thereof these
Bank Notes cannot be used for transacting business and/or store of value for
future usage. The Specified Bank Notes can be exchanged for value
at any of the 19 offices of the Reserve Bank of India and deposited at
any of the bank branches of commercial banks/ Regional Rural Banks/
Co-operative banks (only Urban Co-operative Banks and State Co-operative
Banks) or at any Head Post Office or Sub-Post Office. The RBI is now issuing new currency notes of
the denominations of Rs.500 and Rs.2000.
The decision was taken to minimise the black money and corruption. The fake notes are used for antinational and illegal
activities. High denomination notes have been misused by terrorists and for hoarding black money.
Just as every coin has two
sides, the move for Demonetization will have both positive and negative
impacts on the Indian economy.
Talking about the positive
impacts of this move of the Central Government, it will help us to eradicate black money,
corruption to some extent. Further, due
to lack of funding, there will be no
arms smuggling and all the terrorist
activities will also be choked. The proposition by the Government on the new limits on ATM withdrawals being
restricted to Rs.2000 per day, withdrawal
from bank account is Rs.10000 a day
and Rs.20000 a week, indicates that card
transactions will slowly replace the cash transactions in our daily prone
activities. Exchange of money
in banks can only be done producing a
valid identity card like PAN, Aadhar card and Electoral card making it easy for the government to track the money
which is being exchanged in banks. Financial
Intelligence Unit will track all details of the transactions from the
banks. So now it is really difficult to get rid of the black money. The real estate sector will bring in more
transparency thus, leading to more
credibility, making it more
attractive to the foreign investors as well as domestic investors. Loans will become easier and interest rates may come down. As banks
will have more money so more loans will be given out which will increase the
money supply in the market and it will create inflation, but not
instantly.
Now, discussing about the negative
impacts of Demonetisation, the prime cause of worry is that it is
causing great inconvenience to common
man who has to run to bank to
exchange Rs.500 and Rs.1000 notes. Further, it could cost the RBI at least
Rs.12000 crore. It will be very difficult
for half of the population who are not
well versed with the card transactions. The major problem is that big fishes will be left out whose black
money is in the form of foreign currency, gold and property and stashed in tax havens. This will lead to reduction of money circulation in the
economy leading to Deflation.
In a nutshell, we hope the advantages dominate
and it will be in the long term interest of our country comfortably outweighing
the disadvantages. Government needs to
take all the necessary steps so
as to ensure that there will be a smooth flow of currency exchanges,
else it might turn into a chaos. It will make a massive change in our economy. We congratulate the entire government and those hidden brains of our
democracy who have brought this decision. This decision would only be
successful through the combined efforts of both the Government and the
citizens. Let’s resolve to be loyal and faithful. Cheers to a new Move and
let’s be hopeful!
Efforts By:
Nishtha Kapoor
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