What is demonetization?
Demonetization is a situation where the Central bank of the country ( The Reserve Bank in India) withdraws the currency notes of particular denomination as an official mode of payment.
As we all know it’s been a year of demonetization in India. On November 8, 2016 our prime minister had surprisingly made announcement that existing currency of higher denomination (that is 500 and 1000 rupees notes) which amounted to 86% of currency in the country will cease to be legal tenders. The main purpose behind this was to eradicate corruption and black money in country. Government also introduced new currency of 500 and 2000 rupees notes and also requested people to move towards cash-less economy
A year later, progress on all these counts appears to be very uncertain, and should make us question whether this exercise was needed at all to fulfill its stated aims. A lot of analysis has been made by India and other countries and they claimed that demonetization of November 8, 2016 has failed to do what is supposed to do and its impact has turned out to be more prolonged than initially expected. The costs imposed by the currency-scrapping exercise were, however, quite severe, at least in the short term, disrupting ordinary life across the country for several weeks. Opposition criticized the poor implementation of the government scheme and claimed lot of people died standing queues trying to get hands on the new currency. Demonetizations hitted badly in rural areas because of no access or less access to banking and the internet and most of transaction in rural areas are made through cash only. As per the RBI report 2016 it is claimed that 93% of rural centers are unbanked. Therefore demonetization made very bad impact in rural areas in the country and it they had been to great pain. After bearing this pain also our country did not achieved its aim. The Reserve Bank of India on August 30, 2017 released its report on demonetization. In the report, it said 99 per cent of the banned notes came back into the banking system which trashes all claims of Shri Narendra Modi that the move will flush out the black money and counterfeit currency. That mean two things either government failed to implement it efficiently or the black money held in cash was very.
Though we all know that due to demonetization we faced many problems but it is true that demonetization will be efficient for long run and people will get benefit out of it. And through cashless method it is true that government will have check over all the transactions. This will take some time and it is true that government will have to review some of its financial schemes so that its citizens bear less pain.