Con’s of Demonetization

2. Demonetization is the act of Stripping a Currency Unit of its status as legal tender.
 It occurs whenever there is a Change of National Currency.
 The current form or forms of money is pulled from circulation and retired, often to
be replaced with New Notes or Coins.
 Sometimes, a country completely replaces the old currency with new currency.
 The opposite of demonetization is Remonetization, in which a form of payment is
restored as Legal Tender.
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3. There Are Multiple Reasons Why Nations
Demonetize Their Local Units Of Currency.
To Combat
Inflation
To Combat
Corruption And
Crime
(Counterfeiting,
Tax Evasion)
To Discourage A
Cash-dependent
Economy
To Facilitate
Trade
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4.  In an important move, the Government of India declared on 8th November
2016 that the Five Hundred (₹500/-) and One Thousand (₹1000/-) notes will
no longer be legal tender from midnight today.
 The RBI will issue Two thousand rupee (₹2000/-) notes and new notes of
Five hundred (₹500/-) will be placed in circulation from 10th November
2016.
 Notes of One Hundred (₹100/-), Fifty (₹50/-), Twenty (₹20/-), Ten (₹10/-),
Five (₹5/-), Two (₹2/-) and One (₹1/-) rupee will remain Legal Tender and
will remain unaffected by this decision.
 This measure has been taken by the Honorable PM Sri. Narendra Modi in an
attempt to address the resolve Against Corruption, Black Money and Fake
Notes.
XAVIER INSTITUTE OF MANAGEMENT JABALPUR
4

5. • The Demonetization
removed high-value notes
of ₹500/- and ₹1000/-
from market making
them invalid for the daily
transaction.
• As promised by
Honorable Minister,
government ₹2000/-
notes came into the
market with limited
dissension capacity from
ATMs as well as from
Bank Counters.XAVIER INSTITUTE OF MANAGEMENT JABALPUR 5

6. • As, the small
denominations are
accounted to only 14% to
15% of the Total
Currency in the market,
more and More Small
Denominations would
have been supplied.
• Assuming that the
currency may not be
supplied in a large number,
due to the ideology of
Digitalizing The
Currency.
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7. • Black money holders are
Burning and Destroying
the cash.
• This is going to be a big
Loss To Economy.
• Dollar prices have already
crossed ₹ 68/-.
• The decision to change all
the currencies will at least
cost ₹ 12,00 Crores to
Reserve Bank of
India(RBI).
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8. • Due to Demonetization, the
business has been Negatively
Affected as the Vendors don’t
have enough change to
return to their customers.
• Some of them are still
accepting credits and the old
currency, but still, people are
spending less than they used
to.
• This has even Affected
Restaurants and Other
Business which accepts
digital mode of payment.
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9. • As it is hard to get your hands on
the new currency without
standing in a queue,
• Those who are in urgent need of
money are getting the currency
exchanged from others for
Commissions Ranging Up To
40%.
• Owners of Petrol Pumps and
Other Services are demanding the
customer to avail their service for a
minimum of ₹ 500/- or
₹1,000/-.
• Some Black Money Holders
haven even hired people to stand
in queue for them throughout the
day to get their note exchanged for
a small commission.
XAVIER INSTITUTE OF MANAGEMENT JABALPUR 9

10. • Major industries like real
Estate, Infra, Gold etc.
have been affected and
sales would come down
and that impacts the
growth of the economy.
• Many Transactions Halt,
until the markets gets back
to normalcy.
• Markets may see a
temporary fall, and
temporary recession.
• At least a year would be the
span to retain the
normalcy.
XAVIER INSTITUTE OF MANAGEMENT JABALPUR 10

11. • As demonetization hits real
estate industry very badly,
people has now got no clarity on
how to go ahead in terms of
buying a land or a house.
• Government has to come up
with some sort of Awareness
Campaigns about how the
future of real estate could be
seen,
• Whether any New Laws comes
in to picture.
• If customers has to wait or may
go ahead and buy them?
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12. • A step towards a cashless
economy is a great step, but
government has to bring in
more laws, that helps people
understand about the safety in
digital banking.
• It is the governments
responsibility to make people
aware about, how safe and
good, the Digital Banking is.
• There are high charges now
for Digital Transactions like
at POS, Internet Banking
etc., which has to come
down.XAVIER INSTITUTE OF MANAGEMENT JABALPUR 12

13. • Recalibrating ATM's was not
done at a great pace as it has
to be done in such critical
situations.
• May be Cash Crunch and
Recalibration Of ATMs are
both wontedly done in order
get people into digital
mode.
XAVIER INSTITUTE OF MANAGEMENT JABALPUR 13

14. • Common People are in big
trouble because of the Non
Availability Of Cash for
some days. Whole country
is standing in long queues.
• Banks and ATMs do not
have enough currencies to
entertain everyone.
• We can see at your nearest
ATMs and Banks .
• Over 100 people have been
already dead in 3-4 days.
• There are more than 30%
who don’t use bank
accounts.XAVIER INSTITUTE OF MANAGEMENT JABALPUR 14

15.  Indian Banking System is supposed to be one of the Most Stable, Rigid and Strongest across
the globe. Our banking system is so strong that it could even face and Withstand The Global
Recession In 2008,
 This bold step lead to many Banking Frauds and Illegal Transactions across the country.
 Bankers, Currency Chests and may be a few at RBI, played a major role in the Frauds Post-
demonetization. Police, CBI and I-T raids are just seeing shocking and disturbing figures of
new currency been supplied illegally.
 Also, Poor people are Prone To Corruption.
 There are huge deposits in Jan dhan accounts, bank accounts of poor people, which shows even
Poor People are Corrupted and are ready to save the corrupted.
XAVIER INSTITUTE OF MANAGEMENT JABALPUR 15

16. • Big fishes means The
Defaulters who are actually
responsible for Black Money
will be left out.
• Since, they have money in
form of Lands, Golds or they
have money in Foreign
Accounts.
• They will not be in trouble
due to Demonetization at all.
• That’s why we cannot see any
rich people standing in
queues.
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17. • Demonetization was mainly
targeted at Black Money
Holders, but they have found a
way around it by getting the
currency exchanged from
others for a commission of
20% to 40%.
• Some people have died.
• There are even variations in
some of the Printed Notes.
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18. Pro VS CON
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19. • The advantages are much
dominating and it will be in
the long term interest of our
country comfortably
outweighing the
disadvantages.
• Government need to take all
the necessary steps so as to
ensure that there will be a
smooth flow of currency
exchanges.
• It would turn into chaos if
government takes no
necessary steps to circulate
money correctly.
• It will make a massive change
in our economy.
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20. XAVIER INSTITUTE OF MANAGEMENT JABALPUR 20