Demonetization is one of the Largest events that took place in India in the last decade. It caused a Huge economic crisis, plunging millions of lives into despair as we know. Demonetization has many facets like every other part of society, and despite its repercussions, the act has many supporters. Is this act of demonetization pragmatic enough for India to sustain itself? Demonetizing currency means stopping the circulation of the existing currency and, to replace them with new ones. In India, at the near end of the year 2016, 500 and 1000 rupee notes were deemed to be invalid.
Why was demonetization implemented?
- To eradicate black currency holders and tax avoiders
- To put an end to corruption
- To track down unknown and untracked money circulation such as the ones going into illegal organizations
- To boost the economy and lifestyle
India houses a population that largely relies on cash. Only about half the people own bank accounts. Introducing such a drastic action would bring a Huge economic crisis in the lives of India’s citizens. The primary reason for Introducing the demonetizing act was to prevent widespread corruption in India. So did demonetizing currency yield Appropriate results?
- Increase in the number of taxpayers
- Increased digital payments
- Reducing corruption
- Farmers, small scale workers without digital currency are affected
- GDP plummeted
- 1.5 million people became unemployed
The Reality of Demonetizing currency
- Reserve Bank of India’s plight
After the announcement of the demonetizing act, 500 and 1000 currency notes were deemed invalid. Due to this, most people rushed to banks for the exchange of their currency. Unfortunately, the Reserve Bank of India had hardly a month to replace the currencies into circulation. It led to a lot of chaos with people ending up in long lines in banks and ATMs across India.
- Tracking black money is difficult
The purpose of bringing about demonetization in India was to stop the spread and abuse of black money and corruption. But there is a Huge unaddressed elephant in the room. Black money is usually in the form of goods and property like gold and real estate. It makes the process of tracking down the black money more Difficult process. Hence the economic crisis may not have been alleviated by this demonetizing act.
- Increase in digital currency exchange
Demonetizing currency in India did bring in a few million extra taxpayers, and at the same time, lost nearly the same number of taxpayers. It also caused a significant spike in digital currency transactions.
- Effects on Common citizens of India
Millions of people in India faced a Huge economic crisis due to this demonetizing currency act. People working in the agriculture sector and the small-scale industries rely mainly on transactions of cash. Most of them don’t own bank accounts/digital Transactions. People in rural areas don’t own the proper resources and provisions to deal with such drastic changes in the economy. The cease in liquid transactions caused a Huge dip in the lives of millions of people in India. It even resulted in the loss of numerous lives. Since then, demonetization is being constantly criticized by experts. It is, Considered to be an unreasonable act inducing a Huge economic crisis in India.
The financial uncertainty and economic crisis due to demonetizing money make it clear that there are many downsides to this. But it gained Huge support despite ruining millions of lives since the propaganda makes it a substantial reality. But preventing corruption in India is a dream far, far away for now.