What Is Demonetization?

Demonetization

What is demonetization?

“ Demonetization is the act of stripping a currency unit of its status legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with new currency unit.”

                    On 8th October 2016 Indian Prime Minister Narendra Modi announced that, the note of Rs.500 and Rs.1000 not have a legal tender from 9th  October 2016. This decision caused sensation in the whole country. Social Media was flooded with messages and information. People started counting their money which is stored as legally or illegally. Many people converted money in form of gold. The prices of gold goes high on the night. Peoples are ready to buy gold at the rate of Rs.40,000 to 45,000 per 10 grams and converting their old currency which is illegal.

                     The government also announced that from 10th October the old currency is converted into new currency. Only 4000 is converted into new currency. Government is also announced the old currency of Rs.500 and Rs.1000 is can be used in government hospitals, petrol pumps, for railway ticket.

                    The government said that the old currency would changed into bank or post offices upto 30st December. From 10th October peoples are standing in queue for long of time but they faces the of problems of shortage of new currency. But facing this type of problems peoples are supporting the decision of PM Narendra Modi because the stapes of Demonetization is for in the favour of public.

The main aim of  Demonetization in India is –

• Grab the black money
• Stops the corruption
• Grab and stops the fake note and its circulation
• Stops the funding to  terrorism
• Use the cash less transactions
• Use internet banking

The most interesting thing of demonetization is that people are using various methods to converting black money into white. Some of this methods are as follows

1. Deposit the black money in the accounts of their poor relatives and friends
2. Deposit the black money in the account of others account by giving commission
3. Asking their employees to stand in long queue in front of Banks and ATMs for converting old currency
4. Giving Rs.500 per exchange of Rs.4000 to poor people
5. Booking the railway tickets and cancelling
6. Paying a few months salaries in advance
7. Paying a outstanding bills or salaries
8. Converting black money into gold
9. Purchasing petrol in lots of quantity

                    After the demonetization we saw many changes in government rules and regulations. After the converting Rs.4000 is declined to Rs.2000. From ATM withdrawal is only Rs.2500 to Rs.2000. In bank one person can withdraw Rs.10000 per day and Rs.20000 per week. After that exchanging is stops and limit of withdrawn in bank is extended to Rs.24000 per week. In between the period of demonetization government changed or created many rules regarding exchanging money. The government also change the tax rate and penalty rate for black money.