Demonetisation

demonetisation

CAN YOU VISUALISE ????

DEMONETISATION

ON 8 NOVEMBER 2016 (20:15 IST)

WHAT IS DEMONETISATIONPROCEDUREPRIOR LEAKAGE OF INFORMATIONREACTIONSPOSITIVE EFFECTSNEGATIVE EFFECTSEVASION ATTEMPTSREFERENCESOBJECTIVES OF PRESENTATION

Demonetisation is the act of stripping a currency unit of its status as a legel tender On 8 November 2016 (20:15 IST), The government claimed that*) Curtail the shadow economy, counterfeit and terrorism*) 500 and 1000Mahatma Gandhi Series replace with new 500 and2000 *) TheBSE SENSEX andNIFTY 50 stock indices fell over 6 percent on the next day after the announcement.*) Due tolengthy queues and shortage of money several deaths happen*)Reduced the country'sGDP andindustrial production*) Demonetization was heavily criticised by prominent economists and by world media.

1) WHAT IS DEMONETISATION?

WELCOME TO NEW ERA

The plan began six to ten months prior, and was kept highly confidential 2) PROCEDURE Television Address :

8 November 2016 in a meeting called by thePrime Minister of India Narendra Modi which was followed by Modi's public announcement about the demonetization

Government Ordinance :

Petrol,CNGand gas stations, government hospitals,railway and airline booking counters, state-government recognised dairies and ration stores, and crematoriums were allowed to accept the banned 500 and 1,000 bank notes until December 2, 2017

The plan began six to ten months prior, and was kept highly confidential 2) PROCEDURE contdExchange of old notes :

50 days until 30 December 2016 Initially, the limit was fixed at 4,000 per person from 8 to 13 November,increased to 4,500 per person 4 to 17 November. And reduced to 2,000 per person from 18 November. 250,000 for wedding expense, 25,000 for farmer

Facts and figures :

Up to 97% of the demonetised bank notes have been deposited into banks ,total of 14.97 trillion ($220 billion) as of December 30 out of the 15.4 trillion that was demonetised.]

3) PRIOR LEAKAGE OF INFORMATION Allegations and claims

*) Hindi dailyDainik Jagran quoting RBI sources mentioned about the coming release of new 2000 rupee note alongside withdrawal of 500 and 1000 rupee notes.

*)The HinduBusiness Lineon 21 October 2016 which also mentions about coming 2000 rupee note and about possible withdrawal of 500 and 1000 rupee notes

*) The chairman of theState Bank of Indiahad also openly spoken in April 2016 about the possibility of demonetisation of500 and1000 notes.

*) Nitish Kumar,Arvind Kejriwal and Rahul Gandhi alleged that the BJP made large purchases of land in Bihar ahead of the demonetisation because they had prior information.

April fools joke*) Seven months before the announcement, theGujarati newspaperAkilapublished an article that "announced" the demonetization of 500 and 1000 rupee notes.

IMPACT OF DEMONETISATION

4) REACTIONS Support*) Arundhati Bhattacharya (Chairperson ofSBI) andChanda Kochhar (MD & CEO ofICICI Bank) appreciated the move in the sense that it would help curb black money.*) Infosys founderN. R. Narayana Murthy praised the move similarly Nitish Kumar,Anna Hazare,ThePresident of IndiaPranab Mukherjeewelcomed the demonetisation move by calling it bold stepsCriticism*) FormerSenior Vice-President and Chief Economist of the World Bank,Kaushik Basu, called it a 'major mistake*) Prabhat Patnaik, a former professor of economics at theJawaharlal Nehru University, Delhicalled the move 'witless' and 'anti-peopleOppositionA Congress-led opposition which includes 13 political parties, opposed thecurrent governmenton the demonetisation issue in the Winter Session of theIndian Parliamenton 16 November 2016

SOME PEOPLE WERE IN THE FAVOUR OF IT

5) POSITIVE EFFECTS 1.Black money: At one stroke the Prime Minister has choked the supply of black money stacked inside the country. Of the Rs 17 lakh crore of total currency in circulation in the country, black money is estimated at mind-boggling Rs 3 lakh crore. Black money is nothing but a plunder of the nation. Black money operators run a parallel economy which shakes the very foundation of the Indian economy. With Modis demonetisation move, all domestic black money will either be deposited into the banks with heavy penalty or be simply destroyed.

2.Economy: Demonetisation will have a huge resultant effect on the Indian economy. The clean-up of illegal cash will help turn around the economy. First, it will bring more borrowings to the exchequer, improve inflation outlook and increase Indias gross domestic product (GDP). Second, it will revive investment opportunities and give a fillip to infrastructure and the manufacturing sector. Third, it will help reduce interest rates and lower income tax rate.

SOME WERE AGAINST IT

6) NEGATIVE EFFECTS

Cash shortageATMs were running out of cash after a few hours of being functional, and around half the ATMs in the country were non-functional.Ration shop was looted inMadhya Pradesh

DeathsBy the end of the year, 100 people had died due to demonetization, standing in queues for hours to exchange their old banknotes, lack of medical help and Hunger.Chief Minister of DelhiArvind Kejriwallashed out at a BBC reporter who asked him to justify death claim 19 November.

Stock market crash15 November 2016, theBSE SENSEX index was lower by 565 points and theNIFTY 50index was below 8100 intraday

Transportation haltsAbout 800,000 truck drivers were affected by scarcity of cash, with around 400,000 trucks stranded at major highways across India.

7) EVASION ATTEMPTS

Gold purchasesInGujarat ,Delhi and many other major cities, sales of gold increased on 9 November

Donations in templescash deposited intohundis, or cash collection boxes in temples and gurudwaras are exempted from inquiry by the tax department

Multiple bank transactionsTransactions at different bank branches and also sending hired people, employees and followers in groups to exchange large amounts of banned currency at banks

BBC NEWS on DEMONETISATION

8) REFERENCE

Know about basic on Demonetisation click here https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation"Demonetisation: 33 deaths since government scrapped Rs 500, Rs 1000 notes". 1

6 November 2016.^Jump up to:abc"Withdrawal of Legal Tender Status for 500 and 1000 Notes: RBI Notice (Revised)".

Reserve Bank of India. 8 November 2016. Retrieved8 November2016.Jump up^"Here is what PM Modi said about the new Rs 500, Rs 2000 notes and black money".

India Today. 8 November 2016. Retrieved9 November2016.Jump up^"Notes out of circulation".

The Times of India. 8 November 2016.Jump up^Saikia, Bijoy Sankar (18 Nov 2016)."Demonetisation may drag India behind China in GDP growth, rob fastest-growing economy tag".

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