Question

What is "demonetization"in 250words?

Answer 1

After one and a half year of Demonetization, Indian Economy seems to have done away with all the negative impacts of Demonetization. The Economic Survey of India 2017-18, released just before the presentation of General Budget 2018 in Parliament has emphasized that all the negative impact of Demonetization of Rs.500/- and Rs.1000/- currency notes has ended. The Demonetization was announced as a surprise on November 8, 2016.On November 8, 2016, the Prime Minister of India, Narendra Modi announced the Demonetization of all Rs.500 and Rs. 1,000 denominationbanknotes of the Mahatma Gandhi Series.

The demonetization announcement made the use of Rs.500 and Rs.1000 banknotes invalid past midnight of November 8.

It was also announced that the new Rs.500 and Rs.2000 banknotes of the Mahatma Gandhi new series would be introduced in exchange for the old banknotes.

The objective of demonetization as claimed by Government of India was to curtail the black money running as shadow economy and to stop the use of counterfeit cash to fund illegal activity and terrorism. 

The sudden nature of the announcement—and the prolonged cash shortages in the weeks that followed—created significant disruption throughout the economy, threatening economic output. 

The demonetization move was heavily criticized as poorly planned and unfair, and was met with protests, litigation, and strikes.

The announcement was sudden and unscheduled. It was a live television address at 8PM on November 8, 2016.  In the days following the demonetisation, the country faced severe cash shortages with severe detrimental effects across the economy. People seeking to exchange their bank notes had to stand in lengthy queues, and several deaths were linked to the inconveniences caused due to the rush to exchange cash. As the cash shortages grew in the weeks following the move, the demonetization was heavily criticised by prominent economists and by world media

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