Write a Demonetisation Essay
Answers
Answer:
Demonetization stands for scraping of a currency by the government from being used as legal tender. When a legal tender is demonetized by the government, it becomes scrap instantly, losing its worth in the market. When a government pulls the old currency out from the market, it might issue a new currency replacing it.
The information of demonetization is kept confidential till the last day; otherwise, it would defeat the purpose of demonetization itself. The main objective of demonetization is to counter tax evasion and circulation of black money, as well as counterfeit or fake currency.
If the information of demonetization is somehow leaked, the tax evaders and black money holders will get ample amount of time to convert their money in other legal forms like – land, gold, jewelry etc, thus, the money will never reach banks, defeating the very purpose of demonetization.
On 8th November, 2016, at 20:15, in an unscheduled address to the nation, the Prime Minister of India, Mr. Narendra Modi announced the cabinet’s decision to ban currency notes of denominations Rs. 500 and Rs. 1000. Though, it wasn’t the first time, and previously demonetization had been effected in India in 1946 and 1978.
Though, the move had the support of banks and a large portion of general populace, it was criticized by political parties and other factions, who thought that it was unplanned and will only damage the economy of the nation.
Answer:
Introduction:
When a government scraps the legal tender of a certain denomination, it is termed as demonetization. Usually the tender thus scraped is replaced by new currency by the government. The government of India had previously announced demonetization on three occasions – first in 1946, second in 1978 and third in 2016, with the aim of countering black money, tax evasion and fake currency.
Consequences of Demonetization:
There are three main consequences of demonetization – it counters tax evasion, it counters black money and lastly it voids or nulls the value of fake or counterfeit currency. The move was directed towards the income which was not reported and thus escaped taxation. The unreported and untaxed money largely constituted of the money obtained from illegal activities like – human trafficking, smuggling etc. Such money was also used to fund anti-national activities, such as naxalism and terrorism.
India’s neighbour Pakistan, the main source of terrorism in India, had strategically printed fake Indian currency in order to destabilize Indian economy as well as to fund terrorism and other anti-national activities on Indian soil. Thus, the decision of demonetization played a significant role in stopping the funds for the promotion of illegal and anti-national activities, along with countering internal tax evasions and unaccounted stashing of currency notes.
With sudden scrapping of tenders, those who have stashed large amount of currency had no option but to declare it and pay the taxes.
Conclusion:
The decision of demonetization might have been hard for the general populace of the nation, nevertheless it was also necessary. It’s better to be in long queues in front of banks for a brief period of time, rather than to leave the nation at mercy of foreign conspirators. Though, some factions may criticize the move as a bad decision and a jolt on economy; nevertheless, it was necessary considering naxal funding, terror funding and unaccounted money that was circulating in Indian markets.