India has seen a number of revolutionary changes in its history and present, and will continue to come across many more in future too. The important point to be noted here is that, it has brought a huge change in the monitoring and governing system of the country. Instead of appreciating the efforts taken by our regulatory system, majority of the citizens are surprised and shocked by such decisions at the same time. One such revolutionary effort is the demonetization of Indian currency to combat various forms of corruption in our society.
What is Demonetization?
It is a process of removing or abolishing the values attached to the money or monetary system of any institution or the government bodies in a country or the world. It is executed to replace the old currency with a new one, and is necessary whenever there is a need to bring about a change in the national currency of any country. The prime motto of implementing this system is to get rid with the practice of using money for unfair means in the society. So far, many nations have witnessed demonetization of their currency, with India being able to experience it for the third time.
Demonetization of Indian currency in 1978
Around 38 years ago, in the year 1978, then Prime Minister Morarji Desai has taken a crucial step to fight against the corruption and accumulation of black money which was mushrooming in India during that time. He had imposed the policy of demonetization in 1978 to scrap out Rs 1,000, Rs 5000, and Rs 10,000 notes immediately after emergency was lifted from India. Even that time, citizens were as shocked and surprised as they are today with the decision taken by our current Prime Minister Narendra Modi. Generally, the currencies of high value are vulnerable to be used for unfair purposes, and hence, it becomes necessary to take such big steps to eradicate the malfunctioning elements from society.
After Effects of Demonetization in India
This mass movement taken towards the improvisation of Indian society will have some major impacts on the economy of the country. Thus, here are some of the major effects of demonetization of Indian currency:
- It will majorly affect the GDP and inflation rates in India, by sustaining the present GDP of 7.6% in future.
- Due to reserved transaction, circulation, and supply of money, there will be lesser chances of retaining black money by defaulters in our society.
- The weaker sections of the society who are not well exposed to technology and are not aware of cashless payment system, may find some difficulties initially, but the overall impact is going to be positive for everyone in the long term.
- This massive step will cause low economic activity and dullness in the consumption demand, but this fall will be compensated in due course of time, and the system will be refined.