The primary reason modi initiated the ban is to force people with illegal cash holding to deposit the money into bank account and pay taxes on them.
Indian’s government collects a tiny fraction of these taxes that advanced democracies do. The demonetization scheme is also a way to crack down on criminal activity. It will be hard for people with large cash holding from purely criminal enterprises to explain how they paid their taxes, and so they won’t be able deposit their money. and the government expect to be able to use the ban as an opportunity to round up counterfeit currency minted by terrorist operation.
,When PM Modi announced that Rs with the denomination of 500/- and 1000/- would cease to be the legal tender from 9th of Nov, the whole country was stunned. This decision caused sensation in the whole country. Social Media was flooded with messages and information. People started counting the trash they had accumulated for years legally or illegally.
Some tried to invest their dying currency in gold. Some contacted their near and dear ones in this miserable hour. People could get only Rs 4000/ of old denomination exchanged with the new one. Big lines became the order of the day.
Instead of getting shorter, these queues were getting longer with every passing day. The last date for the whole process was 30th of December. The persons could deposit the old cash worth Rs 2.5 lac till the said date.
The main objective of this move was to curb the black money, corruption and fake money menace.
All the people but those who were indulged in malpractices welcomed the move. The whole opposition shook hand against this move under one % or the other. They called this decision a draconian law and wanted the govt to roll back it. Tirades were made to target the decision. Govt also carried out counter attack.
The new currency which replaced the old one is of denomination of 500/- and 2000/-. Though the people faced a lot of money because of shortage of funds, they did criticize the govt for the move. Even they lauded the Modi govt for this big move. Prime
Minister also addressed the people many times telling the people that it was a mahayajna and they must offer their own ahuti in it.
He further said he was aware the hardships they were suffering from but he sought only 50 days for setting the things right. He jibed at the chief political leaders who have stashed big amount of money and now joined hand to force govt to take the decision back.
The most interesting thing regarding the demonetisation is that people are devising various unique methods for transforming their black money in to white one. Some of these methods are as follows –
• Depositing money in the accounts of their poor relatives and friends.
• Enticing the people with some percentage of money for exchange.
• Asking their employees to stand in the long queues in front of Banks and ATMs for getting money exchanged.
• Hiring labors for some Rupees ranging from Rs 500/- to 700/- for becoming the part of long queues in front of banks/ ATMs.
• Converting black money in to gold.
• Paying a few months salaries in advance.
• Paying back loans forcibly.
• Using their influence / links with bank employees and so on.
Impact of Demonetization-
We shall see a great impact of this move of the Central Govt on Indian Society and Economy. The first impact shall be that people will have lower expenditure power. With that they will not be able to purchase luxurious things.
There shall be no ostentatious expenditures on marriages and other ceremonies. So the society will grow lesser materialistic and people more prudent. With the fake money destroyed, Indian economy will see a big boom and the so far booming real estate sector shall fall on the ground.
“ a lot of marriages are being postponed, and those that are managing are doing so by borrowing from relatives and friends”
The things shall be cheaper. Indian Currency shall get respect at the international market. There shall be a great check on the terror-related funding and therefore on terrorist activities. Corruption shall be down to a great extent as people will stop the tendency of accumulating money using wrong means.
It will abridge the gap between the haves and the have nots. However, there may be some difficulties for a couple of months. But this inconvenience shall be temporary and for short-term.