DEMONETIZATION IN INDIA
Demonetization refers to the withdrawal of a particular currency as legal tender. It is a measure that is often taken by governments to combat corruption, black money, and counterfeiting, as well as to encourage the shift toward a cashless economy.
One of the most significant examples of demonetization in recent times is the decision taken by the Government of India in 2016 to withdraw the 500 and 1000 rupee notes from circulation as legal tender. The decision was taken as a means of curbing corruption and black money, as well as to encourage the shift towards a cashless economy.
While demonetization can have negative impacts, such as causing a shortage of cash and disruption of economic activity, it can also have positive impacts. One of the most significant positive impacts of demonetization is the shift towards a cashless economy.
The demonetization drive In India led to an increase in digital transactions. As people were unable to use their old 500 and 1000 rupee notes, they were forced to turn to digital modes of payment, such as debit and credit cards, e-wallets, and mobile banking apps. This shift towards a cashless economy has several benefits.
First, a cashless economy can reduce the incidence of corruption and black money. When transactions are conducted digitally, it is easier to track the movement of money and identify any suspicious activity. This can help to curb corruption and the use of black money, as it becomes more difficult to hide the sources and uses of funds.
Second, a cashless economy can increase financial inclusion. Many people, especially those in rural areas, do not have access to traditional banking services. However, with the proliferation of mobile banking apps and e-wallets, it has become easier for people to access financial services and participate in the formal economy. This can lead to an increase in economic activity and a poverty reduction.
Third, a cashless economy can increase efficiency and reduce the cost of transactions. When transactions are conducted digitally, there is no need to handle and transport physical cash, which can be time-consuming and costly. This can lead to an increase in efficiency and a reduction in the cost of transactions. In conclusion, demonetization can have positive impacts, such as the shift towards a cashless economy. A cashless economy can reduce corruption, increase financial inclusion, and increase efficiency. While demonetization can have negative impacts, such as causing a shortage of cash and disruption of economic activity, the long-term benefits of a cashless economy may outweigh these short-term costs.