Demonetization in India: A Surgical Strike of Indian Economy

Abstract

The fact is that the Indian rupee is the official currency of India and the issuance of the currency is controlled by the Government of India. The Reserve Bank of India (RBI) manages and derives its roles in currency management on the basis of RBI Act – 1934. The first instance of demonetization in India was in 1946 and the second demonetization in 1978 when an ordinance was promulgated to phase out currency notes with different denomination, but it was limited when it is compared to 2016.  On the eve of 8^th November 2016, our Prime Minister Shri Narendera Modi announced the Government of India’s decision to cancel the legal tender character of high denomination currency of Rs. 500 and Rs 1,000  with effect from 09^th November 2016. Thus the demonetization of the highest denomination currency notes became a part and parcel of the past economic scenario in India and the Government of India implemented the new policy regarding the currency notes with some effective measures to curb the black money, corruption and terrorism.