Posted by BLACK BUCKS HUNTED
By shubhangi sharma, Law Students
Demonetisation is a radical monetary step in which a currency unit’s status as a legal tender is declared invalid .This is usually done whenever there is a change of national currency, replacing the old unit with a new one.
On November 8th Indian Prime Minister, Narendra Modi declared that all 500-1000 rupee notes making up the 86% of the cash in circulation in India could not be used in shops from midnight.
However, exceptions were given to petrol, CNG gas stations, government hospitals, railway and airport booking counters, state-government recognised dairies and ration shops & crematoriums to accept the old 500-1000 banknotes until 11 November 2016, which was later extended to 14 November and again to 24 November 2016.
International airports were instructed to facilitate an exchange of notes amounting to a total value of Rs.5000 for foreign tourists out bound passengers, families were allowed to withdraw Rs.2,50,000 for wedding expenses from one account. The rules were also changed for farmers who are permitted to withdraw Rs.25,000 per week from their account against crop loans.
The announcement immediately triggered a mad scrambles to unload the expiring banknotes. Though people had the time to deposit the notes in bank account till 31st December doing so in large quantities could expose them to the high taxes and fines. So they rushed to gas pumps, to jewellery shops & to creditors to repay loans. But upon getting to the front of the line, people were often met with strict withdrawal limits, because, in a display of shocking in epithet, not enough new currency was printed prior to the announcement, worse, the new notes design prevents them from fitting into existing ATMs & their denomination Rs.2000 rupees is too high to be useful for most people , especially given that the government failure to print enough smaller denomination notes means that few can make change.
The scarcity of each due to demonetisation led to chaos and most people holding old banknotes faced difficulties exchanging them due to endless lines outside banks & ATMs across India, which become a daily routine for millions of people waiting to deposit or exchange the old Rs.500 and Rs1000 banknotes since 11 November 2016.
Several people died of standing in queues for hours(According to News Channels). Deaths were also attributed to lack of medial help due to refusal of old banknotes by hospitals.
The government claimed that the demonetisation is an effort to stop counterfeiting of the current banknotes allegedly used for funding terrorism, as well as cracked down on black money in the country.
The move was described as an effort to reduce corruption, the use of drugs and smuggling. Demonetisation received support from several bankers as well as international commentators, although it was criticised by members of opposition parties, which led to the debate in both the houses of parliament. It is clear that Modi has banked on personal equity to effect a behaviour change. Indian, even those with credit cards and payment apps, used a lot of cash.
Sometimes, a shock to a system effects behaviour change far better than any other means. Sure, this may not work every time and not every one is able to pull it off but Modi is evidently gambling that he can.
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Disclaimer:
This Article was prepared or accomplished by Shubhangi Sharma , Student of LLC Greater Noida in his personal capacity. The opinions expressed in this article are the author’s own and do not reflect the view of the LawOF.in
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