Write An Essay On Demonetisation
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Demonetisation is the act of stripping currency units of its status as a legal tender. It occurs when current forms of money are pulled from circulation and replaced with new notes. Countries across the globe have used demonetisation to counterbalance the economic condition, to check inflation, corruption and to promote the cashless economy. Prime Minister Narendra Modi orchestrated this master plan on 8th November 2016 by demonetizing the largest denomination 500 and 1000 banknotes of Mahatma Gandhi series. This is not the first time that India demonetized its currency earlier it was done in 1946 and 1978.
The main objective of this step is to unearth the black money, counterfeit currency, terror financing and to curb corruption. As per RBI 87% transactions in India are cash transactions and this loophole is used by corrupted people to build a parallel economy with unaccounted money this money helps in terror financing which in turn hampers the growth and development of the country. Moreover, demonetisation also helps in reducing the fiscal deficit, encouraging higher tax payments and promoting the cashless economy.
Due to demonetisation, some negative impacts were also seen in a country like North Korea, Ghana, Nigeria and Zimbabwe. In India, it affects the tourism industry, small-scale business operations that deal in cash, Gross Domestic Product (GDP) decline to 6.1%, labour payments issue and it creates panic among the common man.
A well planned demonetisation system can prove beneficial for any economy. However, in the case of mishandled support, this may also cause a problem. Hence, public support must be sought for the overall success of this polity.