Demonetization

For:
1) Has helped the government in tracking black money.
2) Money laundering: Black money was used to fund terrorism, gambling, etc.
3) By not disclosing their assets, people were evading tax.
4) Opened a path towards promoting cashless economy.
5) Boosted currency circulation as before demonetization people were holding
the money in their accounts thus reducing / stopping the cash flow in the
market.
6) Helped govt. in eradicating fake currency.
7) Earlier honest tax payer were facing the burden alone of paying tax.
8) Growth in a country’s GDP: Improved revenue collection, helped country in
increasing its GDP.
9) Improve monetary transmission and reduce lending rates as more and more
people started putting their money in bank accounts.
10) The demonetization drive of higher denominated notes should give a push to
cash deposits in Jan Dhan accounts, of which close to 43% so far have
remained dormant.
11) Improvement in bank deposit base leads to higher SLR (statutory liquidity
ratio) demand.
12) Drastic drop in the rates of properties.
13) Encouraged use of Plastic Money.
14) What’s the logic behind banning 1000 notes and introducing Rs. 2000 notes?

Against:

1) Created chaos as initially there was an inadequate supply of notes.

2) Destroying old notes and printing new notes involved a heavy cost.
3) This sudden move caused a disruption in business activities as the trade was
halted since new currency notes were.
4) ATM’s had to be recalibrated. Even after recalibration there were ATM’s
which were unable to accommodate the new Rs. 2000 notes due to its size.
5) The decision of demonetization appeared to be highly unplanned as the govt.
discontinued the Rs. 500 and Rs. 2000 notes without even printing a single
new note. (No Advance stock and no Intermediate currency b/w Rs 100 and
Rs.2000)
6) Endless queues.
7) There were deaths due to standing in long queues, hospitals, pharmacists,
refused to provide services in exchange of old notes.
8) It resulted in Food Inflation as people started increasing the price in order to
recover the loss.
9) GDP reduced.
10) Farmers suffered Artificial drought as the farmers were hit by this
decision. (The monsoon was favorable to farmers but farmers didn’t have
money to raise crops)
11) Not much Black money was unearthed as people found other means to
convert back money to white money.
12) 86.4% of Indian Currency was demonetized overnight.
13) No businessman was seen in those long queues.
14) It created unemployment as firms didn’t have cash to pay the employees.
15) Economic survey published by finance ministry states that demonetization
was a demand shock, supply shock and liquidity shock. According to “All
India Manufactures Organization ” Macro and small scale industries have
incurred 60% job losses and 47% revenue losses.
16)