History

India is no new to this concept .It has suffered the impact of demonetisation in the past.
• Firstly , in the year 1946 , the currency note of Rs.1000 and 10,000 were removed from
circulation. However these notes were reintroduce in year 1954 along with Rs. 5000 notes.
• And , secondly in the year 1978 which is done with Rs 1000,5000 and 10,000 notes

Massive demonetisation
On the night of 8th November, 2016 at 8:00p.m. The Government of India more specifically
the prime minister in his 48 minutes address unilaterally announced that the notes of worth
Rs 500 and Rs 1000 which amounts to 86.4% of total currency in circulation will no longer
be a legal tender from midnight . Simply it is illegal from midnight . Some facts related to the
currency abolished:-
• It amounts to 86.4% of the total currency in circulation
• India , where 98% of all payments is done by cash
• 85% of the workers are paid in cash

Why this Demonetisation is needed

The main or sole aim is to curb the Black money of the country .Now the question arises is
this really achieved ? . As most of the businessman’s in the country have deposited their
money or more specifically Black money into their workers accounts either of factories or
household so as to save their black money .
However the government has given the time period of 50 days ( 11 November to 31
December) for the exchange of currency notes .And also to curb corruption and
counterfeiting of currency Demonetisation is required.

Advantages of demonetisation
• The government gets a true measure of how much currency is in circulation
• Black money to some extent is controlled
• As black money has major contribution to terrorism , gambling and in increasing the price
of various major assets is somewhat reduced
• It lead the country to be digital by using e- payment option.

Disadvantages of demonetisation
There are more disadvantages of demonetisation than advantages
• It reduced the economic activity of the country to a much
• Loss of Jobs
• Shut down of various MNC's
• Cost burden on government in printing new currency
• Cost burden on banks ATM as they have to change the slots in Their machine as new size of
currency is there
• Slowed economic growth
• And much more…

Conclusion
The abolition of currency has lead to various short term losses on a personal view but as a
matter of national interest it had long terms gains which will not be visible within period of 2-
5 years .