Essay on Demonetisation in India
Demonetisation Essay: Introduction
What is the meaning of Demonetisation?
Demonetisation is the discontinuation of a currency unit. As the corruption and on the rise of black money the government of India under the leadership of The Prime Minister Mr. Narendra Modi took an official move to ban the prevailing notes. This surprise move, which took place on the midnight of November 8, 2016, was one of the bold step chosen by the Indian government in recent times. (This Demonetisation Essay covers all the topics from Merits of Demonetisation to Demerits of Demonetisation. Read On)
This move had twisted the lives of the common man in India creating complications and as well and ended in muddling up their lives. Even though the objectives of demonetisation were to sweep of the illegal activities across the country, The government has to face both pros on cons of this move.
Enacting demonetisation is the replacement of the specific currency with a new currency. Demonisation has occurred two times in Indian economy, during the period of the interim government under Jawaharlal Nehru, in 1946 a the second during 1978, both with the goal of combat tax evasion through black money. On turning the notes of 1000 and 500 to zero-valued paper trash had created different views among the people.
This was termed as a revolutionary step and it received many appreciations as well as support from many businessmen, social workers bankers and demonetization also gained some international support. Due to demonetization of the notes, criminal activities were badly hit. Due to secretive and surprising move of the government, it had reduced note forgery, terrorist attack, human trafficking etc.
This was also a move to promote digital transactions and also e-wallet.The objective was to make India a cashless society. However, demonetisation had brought a huge change in the lives of people of India.The people who had to get the money changed from the banks formed huge lines day by day.
Demonetisation Essay: Merits of Demonetisation
All Counterfeit notes were removed from the economy. There had been a bad habit of People writing over old notes. By Demonetisation Government could devalue all the handwritten notes and issue new ones without this bad culture. The timing of this Demonetization which happened last year helped people know how black money was used to fund illegal activities. Machines of Production of fake notes was completely outdated. The flow of fake currencies from Pakistan and Bangladesh to India had to stop.
In the Banking Sector, over ₹3 trillion (US$47 billion) were deposited in the first few days in the bank. It was deposited in the form of old ₹500 and ₹1,000 Notes. And about ₹500 billion (US$7.8 billion) had been dispensed via withdrawals from bank accounts, ATMs as well as exchanges over the bank counters. Over 200 million transactions were done over the first few days.
Demonetisation helped in Reducing Human trafficking. The demonetisation had decreased sex trafficking a lot in the first few months. And it was effective in reducing child trafficking for a considerable amount of time. Heavy Donations for Colleges and Schools were dissolved in the early months and the wrong practice of dowry came to a dead end. Due to the cash crunch, bribing was also stopped. Reduced Hawala Transactions was another merit of demonetisation. Hawala Transactions was affected for months, Due to the lack of currency.
Digital transactions and Cashless Economy became imminent. More people began using cards and e-wallets, and the demand for point of sales (POS) or card swipe machines increased. From local vendors to multinational food outlets started to use mobile wallets like Paytm. Google also introduced their app Tez specifically targeting Indian Users. The government launched BHIM UPI app. People were given UPI ids for the online transaction without fees. The cashless economy was targeted early at Railways. All the transactions and ticket buying in Railway has been digital since then.The railways placed an order for 10,000 card reader machines. Demonetization helped increase the number of Income Tax filings by 24.7%.
Demonetisation made Radical Groups to Surrender. Demonetisation has badly affected Maoist and Naxalites Groups. The money they have collected over the years has gone devalued. Their surrender rate increased during the early months of demonetization. Sending money to terrorist camps were gradually reduced. There have been reports of dismissing entire terrorist group because of demonetisation. Maoist and Naxalites tried to attack currency carrying vans at first, later surrendered.
Demonetisation Essay: Demerits of Demonetization
There was a huge Cash Crunch. The other denominations of currencies were only about 15% that made the society to run their lives with this small percentage. People had to do transactions with the little-valued currency for hefty amounts. Transactions of lakhs and crores had to be done using the 10Rs, 50Rs and 100Rs Notes until the new notes came into existence. Even after the announcement of new currencies, there was a huge lag to get the notes circulated.
All the major industries like real estate, infrastructure, gold, minerals, spices etc have been affected and sales came down and that impacted the growth of the economy. This lead to an Economic Slowdown. All the transactions were affected badly. All Markets faced a temporary fall. Even though government guarantees a long-term growth in the economy, the short-term losses for the industries and small-scale businesses were hard to cope up with.
Problems in Real Estate. People got doubt of buying and selling of their land and houses. There was a lot of awareness camps done by the government to make the real estate field get into power again. All the legal and cash related doubts had to be cleared. The New Step towards digital economy forced the government to build new cyber laws. Cyber crimes became common and common man in India, not so fond of using internet made fool and was cheated for money.
Since the Banks in India was held responsible for all the currency exchanges and transactions, the least corrupted sector became the most corrupted one after demonetisation. Bank employees were bribed for currency exchanges. There were cases registered stating the early release of new currency notes. Backdoor entry to the bank was also enabled by the employees. The corruption of banking sector itself made Indian Economy a huge dip.
Refilling ATM Cash was another huge hurdle. There were long queues in front of ATMs and frequent fainting in the sun became common news. People who needed urgent money for hospital purposes were made to stand in the sun for hours to take their own money. Many Deaths were reported since Demonetisation due to many reasons eventually started off with the unavailability of cash.