Draft a short essay on demonetization
Answers
Demonetization means the withdrawal of existing currency in the form of notes or coins, and issuing new notes or coins in its place. It is the process of invalidating the value of currencies in circulation.
he Government of India demonetized the circulation of Rs 500 and Rs 1000 on 8th November, 2016. The legal tender of these currencies became invalid, people could no longer use this type of money to do any transaction. They were required to deposit the demonetized notes with the bank or exchange old notes for new ones.
Demonetization is generally considered to have a good effect in the long-term because it accelerates the digitization of the economy. If an economy is chiefly cash based, and there are large cash based transactions, then demonetization may promote digital economy. Once people deposit their physical cash in their bank account, they are more likely to use digital modes while making payments.
Fake currency would get filtered and not be allowed to be deposited or exchanged. This will help the Government fight against the problem of fake currency.
The process of demonetization also helps the government to track unaccounted money or cash whose income tax has not being paid. Due to demonetization, there is likelihood that people who had been hiding their income will declare their income and pay tax on the same.
The banning of high value currencies also reduce illegal activities. This is because most of these type of activities are funded by cash that is gotten from people engaging in illegal activities.
Trade and economy is affected, at least in the short-term. The consequences of demonetization is that it takes some time for suppliers and consumers to adjust to the new monetary policy and this may cause trade disruptions. The economy of a country slows down due to interruptions and disruptions. It may lead to a situation of cash crunch since there is little money in circulation due to unavailability of big currency denominations. The overall demand for products, especially of luxury commodities, is negatively effected in the short-term.
Illiterate people find it difficult to operate through mobile wallets, credit cards, or net banking facilities. It can be painful if they are they are denied to make cash transaction, even if it is for a short period of time.
Elderly people cannot wait in queue for hours for depositing the invalidated currency into their bank account.
Demonetization
'PM Narendra Modi's decision of banning 500&1000 notes has caused political, economical, and social turbulence in India. ‘This move of the PM is being hailed as significant and important an event as was Mahatma Gandhi’s movements against the British. He did it for the political freedom of the country; PM Modi did it for the economic freedom of the poor and underprivileged people of our country.
It is not the first time currency is being changed. It has happened earlier also. Demonetization was implemented first in 1946, in 1956, and in 1978 also. The purpose behind previous demonetization reforms were the same as is now—curbing counterfeit money and black money.
This crusade against the black money has been welcomed by the masses. However, there is furor of protests, complaints, and resistance to the move from those who have been hit hard, especially the corrupt politicians, businessmen, etc. PM Modi’s banning the notes aims at ferreting out billions of rupees stashed away in hard cash by some unscrupulous anti-national people such as criminals, terrorists, drug-smugglers, gamblers, corrupt politicians and officers, and businessmen.
It has been reported that India is on top of the list of countries that have kept their black money in Swiss Banks. India with $1,456 billion or $1.4 trillion has more money in Swiss banks than the rest of the world combined. So you can imagine the extent of black money problem in our country. Similarly, within the nation the amount of hidden black money in the form of 500 and 1000 rupees notes is equally staggering. If the same amount is brought back to our country, our economy will flourish fast. PM Modi’s intention behind the move is purely to break the back of those people who have the black money or are involved in black money activities. Secondly, some anti-national agencies are using this black money and fake money to destabilize India. Pakistan and China are directly involved in these countries. PM Modi’s move aims at disrupting their anti-India activities by banning these notes, as it has been confirmed, these anti-India agencies use fake 500 and 1000 rupees notes by printing them.
Undoubtedly, the entire nation faced many problems such as long queues at banks, ATMs, etc., the Government tried its best to make people comfortable by providing incentives and facilities on cashless transactions. Nor was there any shortage of basic necessity goods and commodities. People who want corruption and misuse of money appreciated the move and bore all the inconveniences smilingly. Only those who incurred heavy losses owing to hoarding and stashing away currency in bulk were found complaining.
One just fails to understand as to why some political parties in opposition who are unnecessarily making such a mountain out of a molehill. The PM has taken this step keeping the country’s prosperity and security in mind. Undoubtedly, there will be some inconvenience for some days. Such politicians as are trying to take undue advantage of the situation must be ashamed of themselves. Besides, the poor, the mediocre sections of India have welcomed this decision of the PM. In the long run this move is going to benefit the nation. There will be less corruption; more investment; better infrastructure; and general improvement in everything.