Demonetization in India involves removing high denomination currency notes, first announced by PM Narendra Modi on November 8, 2016, aimed at combatting black money, fraud, and corruption. The initiative included restrictions on cash withdrawals, allowed certain exceptions for events like weddings, and primarily targeted the reduction of cash circulation in the economy while promoting digital transactions. Despite its intended benefits, the move led to significant challenges including cash shortages, impacting various sectors and causing hardships for the public.

1. By:
VaddiAditya

2.  Demonetization is the act of stripping a currency unit of its status as
legal tender.
 The old unit of currency must be retired and replaced with a new
currency unit.

3.  A similar exercise was conducted in 1978 under
prime minister Morarji Desai. When the
government discontinued, the circulation of
Rs.1000, Rs.5000 and Rs.10,000.
 The then finance minister HM Patel and then the
Reserve Bank of India governor IG Patel oversaw
the demonetization exercise.

4.  On 8 November 2016 PM Narendra Modi announced the demonetisation in
an unscheduled live televised address at 20:00pm.
 Modi declared that use of all Rs. 500 and Rs.1000 banknotes would be
invalid past midnight, and announced the issuance of new Rs. 500and Rs.
2000 banknotes in exchange for the old banknotes.

6.  Cash withdrawals from bank accounts were restricted to Rs. 10,000 per
day and Rs. 20,000per week per account from 10 to 13 November.
 The limit was increased to Rs. 24,000 per week from 14 November
2016.
 A daily limit on withdrawals from ATM was also imposed varying from
Rs. 20,000per day till 14 November, and Rs. 25,000 per day till 31
December.
 This limit was increased to Rs. 4,500 per day from January 1, and
again to Rs. 10,000 from January 16, 2017

7.  On 17 November 2016, families were allowed to withdraw Rs. 2,50,000
for wedding expenses from one account provided it was KYC norm.
 The rules were also changed for farmers who are permitted to withdraw
Rs. 25,000 per week from their accounts against crop loans.

8.  To tackle black money in the economy.
 To lower the cash circulation in the country which is directly related to
the corruption in our country.
 To eliminate fake currency and dodgy funds which have been used by
terror groups to fund terrorism in India.
 To fight black money, corruption, terrorism and counterfeit currency with
one single decision.

9.  Boost deposit base and savings.
 Improve monetary transmission and reduce lending rates.
 The demonetization drive of higher denominated notes should give a
push to cash deposits in Jan Dhan accounts.
 Benefits from higher income tax collections.
 Rise in GDP growth potential.
 Support government finance.

10.  Converting black money into Gold.
 Donations in temples and other.
 Multiple bank transactions.
 Booking large number of tickets in railways and airways.
 Depositing money in the accounts of their parents, relatives and friends.
 Enticing people with some percentage of money for exchange.
 Paying bank loans.
 Paying a few months salaries in advance.
 Using their links with bank employees to exchange of notes.

11.  Demonetization impacted 20 trillion human trafficking industry.
 Other sectors like drug trafficking, illegal trade and the money use in it,
funding of election and involvement of various terrorist groups effected
badly.
 Steps towards cashless economy.
 Real estate can see significant course of correction.
 Less chance of avoiding taxes.
 Parallel economy.

12.  Cash shortage.
 Stock market crash.
 Dumping of agricultural produce.
 Drop in industrial output.
 Queues outside of bank.
 People faced difficulties in marriage occasions and other.
 Many people done have bank accounts in rural areas.

15.  Income tax raids and money came into system.
 Fighting corruption and counterfeiting.
 Expanding the formal economic grid and building digital economy.
 The Indian finance minister Arun Jaitley claimed the direct tax collection
and it has increased by 14.4%
 More retail outlets are accepting e-wallets India is moving towards
cashless transactions.