Ban on Rs. 1000 and Rs. 500 Currency Notes in India - An Anti Corruption Move
In a bid to cut corruption, the Prime Minister of India, Mr. Narendra Modi has
announced the ban on Rs. 1000 and Rs. 500 currency notes. What is being an
unpredictable move by Modi, he announced during his special address to the nation
that the currency notes of Rs. 500 and Rs. 1000 will be illegal starting mid night of
8thof November 2016. "Currency notes of Rs 1,000 and Rs 500 will be just paper with
no value, " announced Modi.
• This move from the Indian Prime
Minster is his strike against the
ever increasing black money in
• While this announcement was
met with shock and confusion by
many, there are others who
termed this as the Surgical Strike
on Black Money.
• Let us have a look at the reasons
for the ban and how this can
affect our economy going
• India has seen the increase in the fake
currency notes of higher denomination
• For all those ordinary people, the fake notes
look much similar to the genuine ones even
when the security feature is not copied.
• Such fake notes are used for illegal and anti-
• The currency notes of high denomination are
used by terrorists and to hoard the black
money into our nation.
• As the economy of India is cash based, such
circulation of fake currency notes has become
• So, to contain the increase in fake notes and
black money, the scheme to ban Rs. 500 and
Rs. 1000 currency notes has been introduced
by the government.
• As per this scheme the legal tender
character to the currency notes in Rs. 500
and Rs. 1000 denominations are
• Due to this, the old high denomination
notes are invalid and cannot be used for
any transactions nor can be stored as a
value for use in the future.
• These notes can now be exchanged for the
same value of money at the RBI offices or
at various bank and post offices.
• People can deposit their old currency
till the 30th of December 2016 in their
respective bank accounts.
• Most of the ATMs across the nation
are closed on the 9th and 10th of
November and the withdrawal limit
from the 11th of November is Rs. 2000
and the same would be increased to
Rs. 4000 per day.
While the decision taken by the government was indeed a bold one, both the
bankers and economists do feel that this ban would for sure have a ripple
effect on both gold and real estate transactions as these are the instruments
that are used by majority of individuals to hoard the black money they have.
• Share markets will for sure see the impact with the prices of the shares shooting
higher. A negative impact can be seen on the cash focused sectors in the stock
market. This can trigger to all round selling bringing down the indices from their
• This move will also impact and lower the political spending during elections
especially in states like Punjab and UP where huge cash is spent during elections.
• The Rupee value will slowly strengthen as
the time passes.
• The inflation too would go down and this
would benefit the middle and the lower
• More people will be inclined towards
converting paper to gold and this can
increase the investments made in the gold
• Does this mark the beginning of the end of
black money in India? Let 's wait and
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