It’s been a glorious year since the great Indian debacle, demonetization wreaked havoc across the entire nation.
The Indian Prime Minister, Narendra Modi did give a speech on what he thought was going to bring about a positive change. Though the demonetization was meant for eliminating black money and fake money. But did he know the repercussions faced by the citizens when they found out that 500 and 1000 rupee notes would be banned overnight?
Endless ques outside ATMs, engaging in rat races, facing the unforgiving heat, constantly tackling crowds or policemen and other such strenuousness just to exchange remaining old currency, is what the citizens faced.
Below are some disadvantages and advantages on demonetization
- The currencies that were demonetized formed 86% of the value of all banknotes and the rural workers make for 75% of India’s population, Hence, rural people are part of the population that faced relatively more problems. Most of the rural workers are paid their wages in cash. Also, there is still a significantly large number of people from the middle class who are still not accustomed to the digital ways of banking.
- The inconvenience caused to the public was one of the serious issues. Endless ques, confused people (especially the rural population), passing out due to lack of energy. The matter had escalated when there were even deaths reported due to heatwave.
- Economical disruptions briefly became an unwelcoming part in the normal trade activities as it took time to adhere to the new currency policy
- Paying bills was a tremendous task. People were literally racing against time to try to pay bills before the demonetization finally caught up to them.
- Because of the ban of the small currency notes, it was difficult to make purchases because, sure as hell, it was and still is an almost impossible thing to get change for an amount as big as Rs.2,000.
- Elimination black money circulation, as old currencies can no longer be deposited into banks, and can’t even be used for trade purposes.
- Tax collection can be done more efficiently since deposited money can be taxed as opposed to hard cash.
- A huge rise in the promotion of digital ways of banking and digital currencies like bitcoins, will encourage people to use more futuristic ways of using money.
- Improved revenue collection, low lending rates, growth in savings and deposits are likely to improve GDP growth.
- Fraudulent activities will be reduced since the introduction of new currencies can halt activities of fraudsters who make illegal money by counterfeiting coins and notes.