What Is Demonetization
When the government legally closes the old currency and declares to bring a new currency, it is called demonetization.
After this, there is no cost of old currency or notes. However, the time is given by the government to replace old notes with banks, so that they can change their old notes which have been invalidated.
When Demonetization Took Place
On November 8, 2016, Prime Minister Narendra Modi announced the closure of 1000 and 500 rupees notes in the country, which means a declaration of monetization. RBI governor Urjit Patel also supported the government’s announcement. After that, the government brought new notes of Rs 500 and Rs 2,000 in the market.
Role Of Reserve Bank Of India
According to RBI, there were notes worth Rs 16.42 lakh crore in the market till March 31, 2016, of which about 14.18 lakh rupees were in the form of 500 and 1000 notes. The Reserve Bank of India formed in 1938 has not yet issued a note of more than Rs. 10,000.
Governments decide for monetization to curb black money, corruption, fake notes, and terrorist activities. People engaged in illegal activities keep notes with them. In such a way, monopolization directly injures them.
Sometimes cash ban is done to discourage cash transactions. Modi government of the Center also hopes that ban on black money, fake notes and terrorism will be curbed. However, the common man faced many difficulties due to the ban on the ban.
A Common Process For Many Countries
The Central Government is trying to discourage cash transactions from this decision. In many countries, monetization is considered to be a very common process.
On the contrary, no work has been done to repair the economy. That’s why a liter of milk is sold in around 13 thousand rupees and one egg is sold for 900 rupees.
The most surprising thing is that we are not weighing in Venezuela for counting the notes instead of luggage. This means that instead of a slice of butter, much weight is being taken for notes.
When India Was Made The First Demonetization
For the first time in India in 1946, the decision to close 500, 1000 and 10 thousand notes were taken. In the 1970s, the Wanchoo Committee related to direct tax investigation had suggested monetization, but the suggestion became public, due to which the ban was not made.
In January 1978, the Janata Party government of Morarji Desai closed the notes of 1000, 5000 and 10 thousand by making a law. However, the then RBI governor IG Patel had opposed the ban on this.
Many times the government slowly closes the old notes rather than closing down. In 2005, Manmohan Singh’s Congress-led government had monetized 500 500 notes before 2005.
There were many people who supported this demonetization decision taken by the honorable prime minister or some were there who were hating him for his action. However, demonetization brought a sudden change in the Indian economy.
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