The document summarizes India's demonetization of 500 and 1000 rupee banknotes in 2016. It describes how the move was aimed at curbing black money, counterfeit currency, and terrorist financing. It discusses how the policy resulted in billions being deposited in banks, disrupted hawala transactions and cash flows to separatists and insurgents, and is expected to have economic benefits despite short-term inconveniences and impacts on small businesses and cash-dependent workers. However, it notes the move may not affect those with large stashes of black money stored abroad or in assets like gold.

1. DEMONETISATION OF
INDIAN CURRENCY
-2016
GUIDED BY PRESENTED BY
A RAMKUMAR.M(AP/CSE) MATHI PRIYA J

2. Over View:
 The Government of India had announced the demonetisation of all ₹500 and ₹1000
banknotes on November 8th 2016.
 The government claimed that the action would curtail the shadow economy and crack
down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.
 The Government had also announced the issuance of new ₹500
and ₹2000 banknotes of the New Series in exchange for the old banknotes.
 Though this brave move by Prime Minister Narendra Modi had been praised, the
move was heavily criticized as poorly planned and unfair, and was met with protests,
litigation, and strikes.

3. Black Money:
 At one stroke the Prime Minister had choked the supply of black money stacked
inside the country.
 Black money is considered as a cancer in any economy.
 It is the parallel economy, which weakens the foundation of any country.
 It is estimated that in India, the total amount of black money is ₹3 lakh crore.
 It is huge if we see that the total money in circulation is only ₹17 lakh crore.
 With Modi’s demonetisation move, all domestic black money will either be
deposited into the banks with heavy penalty or be simply destroyed.

4. Fake Notes:
 Demonetisation had dealt a death blow to the counterfeit Indian currency syndicate
operating both inside and outside the country. Counterfeit currency seriously
devalues the real worth of Indian currency.
 According to the Indian Statistical Institute, the circulation of the total amount of fake
currency is over ₹400 crore
 It is also estimated that over ₹70 crore fake currencies are being injected into our
country every year.
 With Prime Minister Modi’s decision to pull out the old ₹500 and ₹1,000 notes and
replace them with new ₹500 and ₹2,000 series has completely stalled the
circulation of counterfeit Indian currency.

5. Bank Deposits:
 It is well known fact that near about 86% currency circulation in India was
composed of 500 and 1000 rupee currency notes.
 Now, the demonetisation of these notes made people deposit their money which
was in the form of 500 and 1000 rupee currency notes into the bank.
 RBI had declared that they had received ₹5.12 trillion worth of deposits until
November 18th
 This deposits of money can boost the Indian GDP(Gross Domestic Product) by 0.5
to 1.5 %
 India’s largest public sector State Bank of India (SBI) had said that it had received
₹1.27 trillion worth of cash deposits.

6. Hawala Transactions:
 Hawala is a method of transferring money without any actual money movement.
 Hawala route is used as a means to facilitate money laundering and terror
financing. Hawala rackets run again on black money.
 With black money suddenly being wiped out of the market, thanks to
demonetisation, hawala operations have come to a grinding halt.
 According to an India Today report, one of the hawala operators in Mumbai has
destroyed currency notes worth about ₹500 crores.

7. Real estate Cleansing:
 It is said that real estate is an industry built on black money.
 The extent of black money floating around in the sector is huge.
 According to an estimate at least 40 per cent of real estate transactions in Delhi-
NCR are in black.
 Modi’s demonetisation move will curtail the flow of black money into the real estate
sector.
 The impact: “An unexpected dip in land and property prices”.

8. Kashmir Unrest:
 The four-month-long unrest in Kashmir valley is on a backburner, thanks to
demonetisation.
 No stone pelting on security forces has been reported in Kashmir ever since the
demonetisation announcement was made.
 An intelligence estimate suggests that Pakistan sends ₹1,000 crore annually to the
separatists for fuelling unrest in Kashmir.
 The money is transferred through hawala route. With hawala transactions
completely choked up, the separatists are now clueless.
 It won’t be wrong to say that “stone palter” Modi completely shattered the Kashmir
unrest with his stone called demonetisation.

9. Naxalites and North-east Insurgency:
 They are the group, whose oxygen is Black Money. They are the worst victim of
demonetisation. Therefore, they termed this move as “Financial Emergency”.
 It is estimated that their yearly turnover is more than ₹500 crore through terror
funding, NGO, forgery and local taxes.
 With the demonetization move, all these stashes of money is no more than a
worthless paper.
 It should be also mentioned that after demonetization, crimes dipped in many
places like Delhi, Pune, and Mumbai according to the recent data.

10. Negative Impacts:
 Inconvenience to common people who will start running to the nearby bank to
exchange the 500 and 1000 currency notes
 Very difficult for more than half the population who are not well versed with the card
transactions.
 This move deeply impacts the working sections of society: drivers, maids, cooks,
electricians, plumbers.
 The small businesses will be affected at least in the shorter run.
 The big fish will be left out whose black money is in the form of foreign currency,
gold and stashed away in tax havens.

11. THANKYOU