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Demonetization
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- 2. What is Demonetization? •“Demonetization is the withdrawal of a particular form of currency from circulation.” • It is a process by which a series of currency will not be legal tender. • The series of currency will not acceptable as valid currency.
- 3. What Happened on Demonetization? •On 8th November 2016, Modi Said, “To break the grip of corruption and black money, we have decided that the currency notes presently in use will no longer be legal tender from midnight tonight.” • Means that 500 and 1000 rupee notes will not be accepted by anyone except the organization declared by the government. • Public can deposit and change the currency from the banks and post offices till 30th December 2016.
- 4. Old v/s NewCurrency Notes
- 5. Background In India •Earlier it was done in 1946 with the complete ban of Rs. 1000, Rs. 5000 and Rs. 10000 Notes to deal with the unaccounted money i.e. Black Money (by British Government). • Second time, it was done in 1978 by Govt when Rs. 1000, Rs. 5000 and Rs. 10000 Notes were demonetized.
- 6. DEMONETIZED/ RE-ISSUED/NEW DENOMINATION Year Month CurrencyNotes Demonetized 1946 January Rs.1000,5000,10000 Demonetized 1978 January Rs.1000,5000,10000 Demonetized 2016 November Rs.500,1000
- 7. Demonetization in 1946and 1978
- 8. Causes of Demonetization •Black Money • Corruption • Fake Currency in the Economy • Terrorist Funding.
- 9. Major Aim ofDemonetization Making India A Cash less Society .
- 10. Benefits of CashlessEconomy • Reduction of Tax Avoidance. • Helps to Control Generation of Black Money. • In financial year 2015, RBI spent Rs. 27 billion on just the activity of currency issuance and management. This could be avoided. • 1 in 7 notes is fake.
- 11. Steps Taken byGovernment to Promote Cashless Transactions • Government has been announcing new schemes, technology and policy moves on cashless methods. • New bank accounts opened have enabled 99% of households to have a bank account. • A variety of new payment methods have come up now - RuPay, BBPS, Paytm and AePS.
- 12. Effect on OnlineTransactions Alternative Modes of Payment • With cash transactions facing a reduction, alternative forms of payment will see a sudden increase in demand. • Digital transaction systems, E-wallets and apps, online transactions using E banking, usage of Plastic money (Debit and Credit Cards), etc. will definitely see substantial increase in demand • This Will Bring More transparency In System And You can Easily track Online Money transactions.
- 13. Effect on MoneySupply
- 14. Effect on Demand RealEstate and Property Gold and luxury goods Consumer goods Automobiles (only to a certain limit) All these mentioned sectors involved Cash transaction.
- 15. Effect on Prices •Price level is expected to be lowered due to decrease in demand from consumer side. This demand driven fall in prices could be understood as follows: • Consumer goods: Prices are expected to fall only marginally due to moderation in demand as use of cards and cheques would compensate for some purchases. • Real Estate and Property: Prices in this sector are largely expected to fall, especially for sales of properties where major part of the transaction is cash based, rather than based on banks transfer or cheque transactions.
- 16. Effect on GDP •Reduction in the consumption demand. • Labour Cost. • Small Scale Industries • Moreover, this expected impact on GDP may not be significant as some of this demand will only be deferred and re- enter the stream once the cash situation becomes normal.
- 17. Towards A CashlessEconomy • While it is practically impossible to have a 100% cashless economy , the proportion of hard cash in the economy will decrease and our economy will get more digitized . • This will result in greater transparency . • Now government has put Some limitation for Cash Withdraw from bank Accounts. People Will go for online payments. • They Will use PayTM Or other online payment to companies for Buying goods or Making payments. • More Use of Debit and Credit Card
- 18. Advantages • Digital Transactions andCashless Economy • Interest Rates • Black money Eliminated • Tax World • Railways
- 19. Attack on BlackMoney Holders • People who possess huge amount of black money in hard cash in complete loss. • Their black money in hard cash is now a pile of trash. • Now if a black money holder want to deposit money in bank account then he/she has to show ID.
- 20. Alternatives Used ByBlack Money Holders • Railway Tickets • Purchase of Gold • Claim as Agricultural Income • Using Employees Accounts
- 21. End of TerroristFunding Huge sums of money especially in hard cash in the denominations of Rs. 500 and Rs. 1000 was used to fund Islamic terrorists , Naxalites. Now , these Organizations will suffer from shortage of funds . Most of These terrorist , Maoist Organization used these Funds for Buying Armsvand Weapons. Buying arms is an extremely difficult task now after this ban.
- 22. Transparency • Online transaction= More transparency = Financial Intelligence Unit Will tack All Online transactions • Now there Will be More Transparency In Real Estate Sector.
- 23. Disadvantages • Shortage ofCash • Death Cause • Crowd at Banks • Economy Slowdown • Real Estate • Black Money in the form of Gold and Properties • Corruption
- 24. Who will payPrice?
- 25. Conclusion • Due topoorly executed plan by government, people are suffered. There has been reports of BJP members admitting that business leaders of India were able to away with this demonetization situation as they had information about this action well in advance.
- 26. Is It AGood Idea Or Not
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- 28. thanks • Presented By: HarpreetPaul B.Com(4th Sem)