Write a paragleph on Demonetion
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Answer:
When a nation’s government legally bans the coins, notes of a certain denomination, the move is termed as demonetization. The currency thus banned, might or might not be replaced by new currency. Demonetization is aimed at countering multiple problems like illegal activities and their funding source, naxalism, terrorism, illegal stashing of currency, tax evasion and counterfeit currency.
Date of Demonetization in India
Prime Minister of India announced the demonetization of legal tenders of Rs. 500 and Rs. 1000, effective from 20:15 on 8th November 2016. Though, it wasn’t the first time, as India had witnessed demonetization twice before.
The first demonetization was effected by the colonial regime on 12th January 1946, while India was being governed under the Government of India Act 1935. A decision to ban 10 Pound notes was made by the government, to check tax evasion and other illegal activities.
The second decision of demonetization was made post independence on 16th January 1978. This time the decision was made to demonetize currency notes of Rs. 1000, Rs. 5000 and Rs. 10000. But the past two occasions are different from the 2016 demonetization, in the way that the banned currency was not replaced by a new one on previous two occasions.
Effects and Advantages of Demonetization in India
Demonetization has far reaching effects on a nation’s economy. Since centuries governments have been using it as a tool to curb corruption and other illegal activities. Demonetization boosts a nation’s economy by phasing out fake currencies and bringing untaxed money into account.
Demonetization is a measure taken with multiple objectives in mind. It would be a fallacy to take it as having a single objective. In general, it serves as a counter measure for various illegal as well as anti national activities. The prime objectives in Indian context were to curb the counterfeit currency that was circulating in the Indian market. Apart from curbing fake currency the move was also targeted to bring untaxed wealth back into the main stream.
India had been dealing with naxalism since decades. Indian naxals receive funds from various sources placed in and outside India. The money used for funding anti-national movement remains outside the reaches of tax agencies and of course are in large denominations i.e. Rs. 500 and Rs. 1000. Instant demonetization of these denominations of currencies resulted in the currency becoming useless, thus stopping the funding of anti-national and illegal activities.
Conclusion
Demonetization isn’t new to the world. Governments across the world have been taking the decisions of demonetization since the past century, from time to time. Though, the currency which was demonetized may differ, the objectives largely have remained the same i.e. to counter inflation, black money, stop illegal activities, pull back counterfeit currency out of the economy, bring unaccounted money under the scanner of tax agencies and to erase accumulation of large untaxed cash by individuals.
Explanation:
Demonetisation: means withdrawing or stopping a currency denomination of its status as a legal tender.
Demonetisation refers, therefore, to the process of deciding that certain coins and banknotes can no longer be exchanged for goods and services.
The process of demonetisation takes the symbolic meaning and power away from a given type of currency.
In India, it was announced on 8th November, 2016 that the Rs. 500 and Rs. 1000 banknotes would cease to qualify as valid tender from 9th November, 2016 onward.
Why is demonetisation used? Demonetisation is used in several situations, whenever a certain type of currency is deemed no longer desirable to use.
Old coins and notes being replaced with new designs: Sometimes, certain denominations of old notes and coins are replaced with newer models. In this situation, the older coins can be officially demonetized. The reasons for such move includes:
elimination of fake notes,
reduce corruption,
stop terror funding, and
bring unused idle cash into the banking channel, etc.
A move to digital currency: Demonetisation has also moved the economy of India towards a cashless system. Some people predict that in the future we will use digital currency to pay for things and physical cash will be totally demonetized.
Demonetisation in India has worked in the many ways in India. India’s demonetisation process has tackled the country’s problem of counterfeit notes.
The process of demonetisation in India has not been without its challenges. It has, however, had both positive and negative impacts in the short-term. It remains to be seen if the positive impacts will be long-lasting.