Demonetization is the act of removing legal tender status of a currency. India demonetized Rs. 500 and Rs. 1000 banknotes in 2016 to curb black money, corruption, and counterfeit currency. While it provided advantages like reducing illegal activity and increasing tax collection, it also had disadvantages such as currency destruction costs, public inconvenience, and slowing down the economy in the short term. The goal of demonetization is to make India's economy cleaner and move it towards greater digitization.