Demonetization

A Surprise for Citizens

November 8, 2016 was a great surprise for the citizens of India. A great surprise because PM Narendra Modi, announced something, something which was done last time in 1978 - “DEMONETIZATION”. PM Modi announced that the currencies in denominations of Rs. 500 and Rs. 1000 will be invalid post-midnight. It was something that the people never expected and was a shock for all as it was a confidential move according to the government which was to be announced and implemented suddenly as to curb black money.

This was not for the first time that India experienced demonetization. First time when it was implemented was before independence i.e. in the year 1946 when currency notes of Rs. 1000 and Rs. 10,000 were removed from circulation. Though it was the first demonetization, it didn’t affect that much because at that time, such high level of denomination was not found much amongst common people. Later, in 1978, the then PM Morarji Desai announced the demonetization of currency notes of Rs. 1000, Rs. 5000 and Rs. 10,000 and pulled them out of circulation. The sole aim for the demonetization in 1978 was only to curb black money, a highlighted matter in that year. Though it was announced in the country by PM, RBI Governor Indraprasad Patel, did not support the implementation and gave a statement that this step is taken only for immobilizing the funds of opposition party and that common people never stored any black money. Then the recent demonetization happened in 2016 under the tenure of PM Narendra Modi. Intentions behind the demonetization this time was not only to curb and stop circulation of black money but also to stop terror funding, corruption and circulation of forged notes in the market.

Photo Courtesy : Google Photos

Now, coming back to November 8, 2016, this time the act literally shook the entire country i.e. not only the lay-man but also the politicians and known personalities of the nation. PM Modi also said in his speech that, “These notes are just papers from tomorrow.”. The very next day, all the banks and ATMs were kept closed as to withdraw the currencies from the counter and storages. People having the notes were given time to deposit the holding currencies in their respective banks and post offices up-to December 30. No restriction was kept on deposition of notes in the banks and at that time, statements were passed that the ATMs and banks will be restock and will be made operational as soon as possible to avoid problems for layman. People were in a great shock as to what had just been announced and were not fully ready to accept the act. Though the people were not ready and were talking about it in negative aspect, they were also cooperating and were slowly adapting to the change. But still, people were afraid of what change it would bring in the market as for their business and what change would come in day-to-day life. It not only affected a sector or a specific area of the market but all of it.

Photo Courtesy : Google Photos

If we compare previous demonetizations and its effects, we can list out some points that were in favour as well as against the change/act. Neglecting the demonetization of the year 1946 as it didn’t affect the country much as well as India was also not independent, we compare the demonetizations of the year 1978 and 2016. If we talk about positive aspect, we can say that may it be 1978 or 2016, country tried fighting the circulation of black money in the market. Also coming to the PR section, both the time the news was announced by broadcasting/telecasting on every news channel as to aware the people as much as possible (In 1978, PM Desai used radios for broadcasting the announcement so that it can reach people as many as possible and in 2016, PM Modi used radios as well as televisions to announce the news for the same.). Coming to the administrative part of the act, both the time, the planning and preparation for the act was kept confidential and was only revealed to the people of country at the same time as to avoid misconceptions. Coming to the negative aspects, the major difference between demonetization of the year 1978 and 2016 is that in the year 1978, PM Desai didn’t have the support of the RBI Governor, I.G. Patel whereas in the year 2016, PM Modi had full support of the RBI Governor Urjit Patel which drastically change the mentality of the layman towards the act. Another difference can be shown as how did it affect the common people of the country. Earlier, it did not leave a great impact on the people and didn’t affect much but in 2016, it did affect people no matter the position of the person. It left a huge impact on the society and in market as well. The whole nation was in a great shock as well as surprised at the same time.

Photo Courtesy : Google Photos

No matter the intention behind the implementation of the act, it did cause inconvenience in the society and affected the daily life of common people. Irrespective of that, if we look in the future that is in long term sense, demonetization supports economic growth of the nation in true sense. This way or that way, people must bear and go with the change as to develop and progress in future. It may happen that people won’t understand the impact of demonetization for now but in future, it may bring a positive change for all. Whether this act was necessary or not is an unending debatable topic but finally it has been implemented and so nothing else can be done except to go according to it, irrespective of comments of layman.