Before going to discuss demonetization, let us first understand what this term is all about. Demonetization is the withdrawal of the particular form of currency. This has come into action again under the government headed by Narendra Modi. We know that this is not the first time India has taken this decision. Earlier it was done in 1946 and then for the second time in 1978. In my opinion, this step is considered as the biggest cleanliness drive in the history against black money and it has given a huge stroke to the economists in the country.
This step is taken to unearth the black money, curb the corruption, and check the inflation. The process of demonetization is; either the old currency will be replaced by new notes or the currency circulation is blocked. Governments bring demonetization into play to also promote cashless transactions.
As per RBI, 87% of transactions in the country are cash transactions and this loophole is used by only those who are indulged in corruption in order to build a parallel economy. This in turn gives rise to terror financing; the result for it would be reduction of growth and development of the country.
Currently, notes like 500 and 2000 are in rotations among people; their total value is around 86%. So, it is expected to reduce the fiscal deficit and promote cashless transactions. These cashless transactions are helpful in monitoring the overall transactions that are happening in the country.
Every coin has two sides and so is demonetization. We all witnessed the crisis it created and affected the precious lives of the masses. A panic enshrouded their lives for months and left them clueless. The economy is no experiencing a huge loss, especially to small-scale markets. Local traders and shopkeepers were put into a deep trouble by taking this step. But this is only for a period of time. People get habituated to things and adjust themselves as per the situations. So, this doesn’t matter for a long time.
This step will surely result into something good in future and helps the country get rid of corruption. If the cashless transactions are brought then this would help in having a clear view of every transaction happening in the country. Keeping the struggle faced by general people aside, demonetization might fetch fruitful results. It is our responsibility to warm welcome such decisions and brave step taken by the Government to reduce black money.
Such steps are generally taken to improve the economy of the country. However, we are experiencing slow GDP growth due to the side effects of demonetization, but still, we must appreciate the genuine effort put by the government of India to keep the black money and corruption at bay.