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.
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.
9. Major Aim of Demonetization
Making India A Cash less Society .
10. Benefits of Cashless Economy
• 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 by Government 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 Online Transactions
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.
14. Effect on Demand
Real Estate 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 Cashless Economy
• 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
19. Attack on Black Money 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 By Black
Money Holders
• Railway Tickets
• Purchase of Gold
• Claim as Agricultural
Income
• Using Employees
Accounts
21. End of Terrorist Funding
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 of Cash
• Death Cause
• Crowd at Banks
• Economy Slowdown
• Real Estate
• Black Money in the
form of Gold and
Properties
• Corruption
25. Conclusion
• Due to poorly 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.
