Author: Shubhi jaiswar,
B.A.LL.B. (1st year),
Hemwati nandan Bahuguna Garhwal University, UTTRAKHAND (Pandit purnanand Tiwari law college Haridwar).
Demonetisation is the act of making a currency unit of no value no use for it status as legal tender.Demonetisation is necessary when there is a change of national currency the old unit of currency must be retired and replaced with the new currency unit. The opposite of demonetization is re monitization where a form of payment is restored as legal tender. There are multiple reason why nation demonatise there local unit of currency. Some reason include to combat inflation, to combat corruption and to discourage a cash system. The process of demonetisation involves either introducing new notes or coins of the same currency with new currency.
In 2016 , the Indian government decided to demonitise the 500/1000 rupee notes ,the two biggest denomination notes. These notes accounted for 86% of the countries cash supply. The government goal was to to eradicate counterfeit currency, fight tax evasion& eliminate black money gotten from money laundering and terrorist financing activities, and promoter cashless economy. By making the largest denomination note worthless individual and entities with huge sum of Black money gotten from parallel cash system forced to convert the money at a bank which is bye law required to acquire tax information from the entity. In 2015 Zimbabwean government demonetised the zimbabwean dollar as a way to combat the countries hyper inflation that was recorded at 231,000,000% the three month process
involved expunging zimbabwean dollar from the countries financial system and solidifying the US dollar , Botswana Pula, and South africian rand as the country’s legal tender in a bid to stabilize the economy.
Another example of demonetisation occurred when the nations of the European monetary union adopted the Euro in 2002. In order to switch to the euro, authority’s first fixed exchange rates for the veriend national currencies into Euro. When the euro was introduced, the old National currencies was demonetised, the old currency is remained convertible into Euro for a while so that a smooth transition through demonetisation would be assured.
The impact of demonetisation was felt more in the social sector and the most affected
was also the poor and the common people. Salaried class is not still able to withdraw their salaries from the banks and ATM as a result of cash deficit. Prime minister Modi has encouraged doing financial transactions using mobile and other electronics means. It is clearly evident that India is moving towards cashless economy. This will cut the black money to a great extent but educating the messaes on the mobile based money transaction is a huge challenge. Finally as a relief to poor people , GOI has announced that black money retrived from the demonetisation measure will be deposited for four years without interest on Kalyan Yojana to benefit the poor in marriage. This will create a positive impact on the social sector in the long run.
#Randeep surjewala of Indian National Congress welcomed the move but remained skeptial on the consequences that would follow.
#CM of bihar nitesh kumar supported the move
#indian social activist Anna Hazare hailed demonetisation as a “”revolutionary step””
#former president of india pranab mukherjee welcomed
#CM’s of indian states like mamta banerjee, arvind kejriwal and pinarayi vijayan have
criticed and led major protest against the decision in thier state and in parliament initially the move to demonitise and try to hinder black money was appreciated, but the manner in which it was carried out by causing hardship to common people was criticised.
– A parliamentry panel report in April 2017 stated that rural household and honest taxpayers worst hit by demonitisation.
– A memorandum was submitted to the President of India Pranab Mukherjee demanding rollback of the decision.
– on 17 November 2016 rally against demonetisation led by CM of Delhi Arvind kejriwal and his West Bengal counterpart Mamta Banerjee at Azadpur Mandi the biggest vegetable.
– 24 November 2016 former prime minister Manmohan Singh said” this scheme will hurt small industries , the farming sector The GDP can decline by about 3% due to this movement.
#Gary rice told that it’s supported the effort to fight corruption and illegal finances by cautioned about the desruption.
#Chinese state media-global times praised the move and termed it as fierce fight against black money and corruption.
#prime minister of Finland and vice President of European commission jyrki katainen welcomed the demonetisation more stressing that bringing transparency will strengthen the Indian economy.
#mikael damberg supported the move by calling it “bold decision”.