Question

Demonetization of currency and its objective

Answer 1

Demonetization of Currency is simply defined as declaring the currency units of the day as discontinued and introducing new currency units in order to replace them. This way a currency e.g. bank notes, is barred to be used as a legal tender of exchange and in its place a new currency is introduced in the market.

Objectives of Demonetization: Following are some of the objectives of demonetization.

1. Documentation of the economy: Undocumented economy or black economy is a parallel economy due to which government misses out on a lot of revenue and this is a major hurdle for the development of the country. Moreover a lot of illegal activities e.g terror financing, corruption, etc. are driven through black economy. When new notes are introduced and old notes have to be replaced with them, a documentation drive is introduced to differentiate between legal and illegal access of money.
2. To counter printing of fake notes: New notes with complicated designs and strong checks of detection are introduced to replace old currency notes which are easily forged.

Answer 2

Aims of Demonetization of currency :

• This was to make India a cashless economy.

• Black money will enter the banks.

• Demonetization is about giving black money holders another chance crack down on terrorism and naxalism.

• It's to capture small savings to drive down interest rates.

• Killing black money to battling terror enabling a cashless economy.

• Surgical strike on the parallel black economy.

• Get every one to have a bank account.

• Get every citizen in India to be monitored on line.

• Keep every one on their toes.