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Essay on Demonetization







  • what is Demonetization?
  • why a country may demonetize its currency?
  • Objective and benefits
  • Facts about Demonetization
  • what is happening in India is termed by some economists
  • Advantages & disadvantages 

what is Demonetization?

Demonetization is the act of stripping a currency unit of its status as legal tender, a country completely replaces the old currency with new currency notes that we use on legal tenders issued by the Government of India.



why a country may demonetize its currency?


Because of include inflation, curbing corruption and promoting cashless transactions. the main reason for this Demonetization or remonetization in India there are two central topics they are terrorism and black money.


Facts about Demonetization


A few years ago, the Government of India has decided that the largest note will be financed, that is, the 500-1000 note, a move that has been declared a masterstroke for the Indian economy by many experts. This is not the first time that India has demonetized its currency, which was done through a complete ban on a 1000-10000 rupee note to deal with the unaccounted money (black money).


The second time it was done in 1978 by Government headed by Morarji Desai when Rs 1000, Rs 5000 and Rs 10000 notes were demonetized.


Objective and benefits


The main objective of this initiative is to identify black money, curb corruption, counterfeit currency as well as prevent finance terrorism. The move is considered to be the largest cleanliness drive against black money in the history of the Indian economy. 


According to the RBI, 87% of transactions in India are cash transactions and this drawback is used by corrupt people to create a parallel economy with unilateral money (black money). This parallel economy helps finance terrorism, which in turn hampers the growth and development of the country.


It is hoped that demonetization will help reduce India's fiscal deficit and improve India's cashless economy which can be easily monitored.


what is happening in India is termed by some economists? 

Some economists say after calling the five hundred and thousand rupee notes the void government is replacing these notes with new ones so technically this is Remonetization.


Advantages of demonetization 



>Track of unaccounted cash:- The government will be able to track any amount of unaccounted cash that is with the tax evaders.

>Stop illegal activities:-it will stop illegal activities like terror funding fake node currency circulation all at once.

>Increase tax revenue:-it will increase tax revenue to the government as tax evaders will get caught this extra revenue can be used by the government for schemes and other projects like building roads hospitals etc this will benefit the poor.


Now comes disadvantages 

>Chaos:- Demonetization will naturally create chaos this is for multiple reasons tax evaders get panicked market investors, middle class, everyone gets panic as all cash must pass through bank and there must be enough new cash with the banks to give the public 

>middle:- class and poor affected:- middle-class and poor will get affected very badly how is this so most of middle-class and poor make cash transactions when there is not enough cash in the system they are the ones who get affected first.

>Demonetization won't stop black money:- Demonetization won't stop black money let us take the example of a business the business is making hundred rupees profit every year but the owner does under-invoicing and shows 50 rupees as profit so he is now having 50 rupees in black as of know demonetization cannot curb black money fourth point is about the

>Real estate fall:-  real estate contributes 11 percent of the Indian GDP, so what will happen to this Lemon percent and also lakhs of poor construction workers working in the real estate sector 

>Rural population depend on cash:- in rural places most transactions are in cash most of the population is illiterate and do not know anything about banking also markets like Mandies where eligible goods are sold get affected very badly 

>recession:- how will demonetization cause recession is nothing but a period of temporary economic decline during which trade and industry activities are reduced so when major sectors of the economy crash there is bound to be recession hitting our economy 

most economists think demonetization is a bad idea their argument is that if the government wants to come black money with deep monetization then only a fraction of their objective will be achieved this is so because most of the black money is either sent abroad in the form of hawala what is invested in the form of assets like gold.


thankyou soo much for reading I hope you like this blog, bye-bye.

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