Demonetization is a process of removing the legal tender status from a previously issued currency. It is usually caused by government action, as opposed to the natural forces that cause inflation.
The essay based on demonetisation is an essay that is written for students. It provides a brief summary of the demonetization in India.
Demonetization is a term used to describe the process of removing money from circulation.
Demonetization occurs when the government officially shuts the old currency and announces the introduction of a new one.
There is no charge for old money or notes after that. The government, on the other hand, has allowed banks time to replace outdated notes so that they may exchange their invalidated notes.
When Did Demonetization Start?
Prime Minister Narendra Modi declared the monetization of the nation on November 8, 2016, when he announced the closure of the 1000 and 500 rupee notes. Urjit Patel, the governor of the Reserve Bank of India, backed the government’s decision. Following that, the government issued fresh Rs 500 and Rs 2,000 notes to the market.
The Reserve Bank of India’s Role
According to the Reserve Bank of India, there were notes worth Rs 16.42 lakh crore in circulation on March 31, 2016, with 14.18 lakh rupees in the shape of 500 and 1000 rupee notes. The Reserve Bank of India, which was established in 1938, has yet to produce a note valued at more than Rs. 10,000.
Why Do We Need a Reminder?
Governments decide on monetization to combat black money, corruption, counterfeit currency, and terrorism. People that participate in unlawful activities maintain a record of their actions. Monopolization harms them directly in this manner.
Cash bans are sometimes implemented to discourage cash transactions. The Modi administration also wants to see a reduction in the use of dark money, counterfeit currency, and terrorism. The ordinary man, on the other hand, had many challenges as a result of the prohibition on the ban.
For Many Countries, This Is A Common Process
The government is attempting to deter cash transactions as a result of this decision. Monetization is seen as a widespread practice in many nations.
On the contrary, there has been little effort made to rebuild the economy. As a result, a liter of milk costs approximately 13 thousand rupees and a single egg costs 900 rupees.
The most unexpected aspect is that we do not weigh in Venezuela for the purpose of counting the notes rather than the baggage. This implies that instead of a piece of butter, notes are given a lot of weight.
When was India’s first demonetization?
The decision to close 500, 1000, and 10,000 rupee notes was made for the first time in India in 1946. The Wanchoo Committee, which looked at direct taxation in the 1970s, recommended monetization, but since the proposal was made public, the prohibition was not enacted.
The Janata Party administration of Morarji Desai passed a legislation in January 1978 that effectively ended the circulation of 1000, 5000, and 10,000 rupee notes. The prohibition, however, was challenged by the then-RBI governor, IG Patel.
Rather of shutting down, the government frequently gradually shuts down the old notes. The Congress-led administration of Manmohan Singh monetized 500 500 notes in 2005.
Many individuals applauded the honorable prime minister’s demonetization move, while others despised him for it. Demonetization, on the other hand, ushered in a sea shift in the Indian economy.
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