Demonetisation AJEENKYA DY PATIL UNIVERSITY

PUNE

A PROJECT BY:
SUNIL JORE
DIVYA SINGH

Presented to :
Snehashish bhattacharya sir
 Definition of demonetization

 Demonetization of Currency -
 Demonetization is a process by which a
series of currency will not be a legal
tender. The series of currency will not
acceptable as valid currency. The same
thing happened with the Rs. 500 and Rs.
1000 note demonetization.The old unit
of currency must be retired and replaced
with a new currency unit.
What Happened on Demonetization in India?

 On 8th November 2016, Government of India had announced that from today onward
rupees 500 and 1000 rupee note will not be a legal tender.
 This means that 500 and 1000 rupee note will be accepted by anyone except the
organisation declared by government.
 They can change the currency from the banks and post offices till 30th December 2016.
 Background

 There is a background to the current decision of demonetization of 500 and 1000 rupee notes. The government has taken
few steps in this direction much before its November 8, 2016 announcement.
 1)government had urged people to create bank accounts under Jan Dhan Yojana. They were asked to deposit all the money
in their Jan Dhan accounts and do their future transaction through banking methods only.
 2)Government initiated was a TAX DECLARATION SCHEME of the income and had given October 30, 2016 deadline for
this purpose. Through this method, the government was able to mop up a huge amount of undeclared income.
 3)However, there were many who still hoarded the black money, and in order to tackle them; the government announced the
demonetization of 500 and 1000 currency notes.
Objectives behind demonetisation

 The government’s stated objective behind the demonetization policy are as follows;
 1) Attempt to make India corruption free.
 2) To curb black money,
 3) To control escalating price rise,
 4) To stop funds flow to illegal activity,
 5) To make people accountable for every rupee they possess and pay income tax return.
 6) Finally, it is an attempt to make a cashless society and create a Digital India.
 Causes
 There can be many causes of
Demonetization in any economy some of
them are : Introduction of New
Currency ,Black Marketing, Currency
Storage, Corruption and others.
 There will be excess fake currency in the
economy is main reason of
demonetization.
 Impact of demonetization

 1) Effect on parallel economy: The removal of these 500 and 1000 notes and
replacement of the same with new 500 and 2000 Rupee Notes is expected to - remove
black money from the economy as they will be blocked since the owners will not be in
a position to deposit the same in the banks, - Temporarily stall the circulation of large
volume of counterfeit currency and - curb the funding for anti-social elements like
smuggling, terrorism, espionage, etc.
 2) Effect on Money Supply: With the older 500 and 1000 Rupees notes being
scrapped, until the new 500 and 2000 Rupees notes get widely circulated in the
market, money supply is expected to reduce in the short run. To the extent that
black money (which is not counterfeit) does not re-enter the system, reserve
money and hence money supply will decrease permanently. However gradually
as the new notes get circulated in the market and the mismatch gets corrected,
money supply will pick up.

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