It’s not an exaggeration that by NOW everyone Knew about the meaning and essence of Demonetization.
“Act of stripping currency unit of its status as a legal tender”
There was about 76% (500 Rs. Notes) and 109% (1000 Rs. Notes) increase in higher denomination in circulation from 2011-16
According to RBI, 86% of Higher Denominations were in circulation.
According to World Bank – Black Money /Shadow/ Parallel Economy holding about 22% of Indian GDP and other estimates shows (20% to 50% of GDP).
Why Demonetization is needed or Intended????
To fight back corruption
To fight back inflation
To discourage a cash system
Putting aside the mere facts, the impact is unusual. The Demonetization move initially welcomed by the people of the country and usual friction from the opposition, gradually turned to be overwhelming and indigestible fact for the common man.
Till date (31-Dec-2016), most of the people of our country still standing in ‘Q’ for new currency at the Banks and ATMs which was ever happened.
Media, on one hand extensively covering the pain of the common man and RBI moves who is trying to stabilize the situation, on the other hand failing in projecting the actual intention or motto behind Demonetization drive. i.e., pushing Indian cash economy (22% cash based) to less cash or cashless economy in near future.
The fundamental question I asked myself is, how we expect to pump back the same amount of cash in the system when we are trying to shift our cash economy to cashless economy.
Even though India is not ready for sudden transformation to a cashless economy, there are necessary steps taken by the Government of India to promote the idea of cashless economy promptly.
constitutional experts say its violation of fundamental rights, economists says this was an unplanned or disorganized move and a common man says its poor execution of the brilliant move, above all I’m not speculating about the outcomes of the demonetization move yet, because we all have seen the immediate impact of this drive so far, but we should wait in patience to see the “real form of the Demonetization drive” in India.
I will be updating the technical issues of Demonetization in present scenario in part-II of this post.