2. Prime Minister Narendra Modi in a surprising way
telecasted on the evening of November 8, 2016
announced that the 500 and 1,000 rupee notes would
cease to be legal tender.
4. Reasons for Demonitization
To facilitate trade.
To combat Inflation.
To combat corruption and crime (Counterfeiting, Tax evasion).
To discourage a cash-dependent economy.
5. During Demonitization
The poorest of the poor are not unhappy with the announcement; they have
nothing to lose, not even a 500-rupee note.
The middle class in the urban and rural areas was initially circumspect but it soon
gave way to affirmation
The situation in the rural areas is worst. The rabi crop may just fail. Marriages are
being re-scheduled. People are unable to pay fees of wards studying outside the
state. Business is at a standstill. Daily wage earners are full of spare time.
BSE Sensex crashed nearly 1,689 points and NIFTY 50 plunged by over 541 points
Unlike the metros, big cities and towns of UP including Lucknow still do not have
adequate new notes in banks and ATMs.
6. After Demonitization
Encouragement to Digital Transactions.
97% of the circulated Notes of 500 and 1000 notes were deposited, but was
assumed to get deposited only 70%.
The number of I-T returns filed for 2016-17 grew by 25 per cent to 2.82 crores.
There was a loss of jobs due to demonetization, particularly in the unorganized
and informal sector and in small enterprises
India's GDP growth for the quarter Jan-Mar '17 was 6.1% as against a forecast of
7.1% by economists. The GDP growth for the entire fiscal year was 7.1%, a
reduction from the 8% of the previous year
