DEMONETIZATION: Is a Right move?

Abstract

The Government of India has implemented a major change by demonetizing  Rs 500 and Rs 1,000 notes which was applicable from midnight of 8^th November, 2016 which meant that rupee 500 and 1,000 notes will  be acceptable by only public organizations not by anyone else. Demonetization is a process by which a series of currency will not be a legal tender. The series of currency will not be acceptable as valid currency. The objective of this paper is to understand the concept of demonetization and it’s Impact on the economy and society. This was not the first time when Indian currency is demonetized, it was third time. Firstly notes were demonetized in the year 1946, secondly in the year 1978 and this is the third time the notes are demonetized in the year 2016. In the year 1938 and 1954 the highest denomination note i.e. of Rs 1,000, Rs 5,000 and Rs 10,000 were printed by the reserve bank of India, which were demonetized in the year 1946 and 1978. In 2016, the Government of India demonetized Rs 500 and Rs 1,000 notes in place of which Rs 500 and Rs 2,000 new notes were printed by reserve bank of India. This time purpose of doing so by the Government is to control the black money, call for cashless India, National security and to avoid tax evasion. There was a different impact of demonetization taken place, of demonetization in the year 1946, 1978 and 2016. The first and the second time the decision of demonetization taken by the government of India failed due to some reasons. To some extent we can conclude that the step taken by the government this time of demonetization was much better than the first two times. A comparison can be made between the denominations of the note with annual per capital GDP.