5 Years of Demonetization

5 Years of Demonetization

Team Ambitiousbaba and AB are here with a Current Affairs Special Series. In this series, candidates will be introduced to current affairs topics daily, which will not only improve their general awareness but also will ensure that the candidates do not lack in any current affairs topic. Today’s Current Affairs topic is 5 Years of Demonetization

Background:

On historic day in Indian economy, On November 8, 2016, Prime Minister Narendra Modi came to on national television and said that all Rs 500 and Rs 1,000 notes would become invalid from midnight. The proclamation targeting on flushing out black money — money hidden from the taxman — led to nearly 86 percent of the currency in circulation becoming invalid four hours later.

Narendra Modi’s decision surprised some economists, who argued that only about 5 percent of black money is socked away in the form of hard cash. The rest is in the form of other assets such as real estate and gold, they argued.

At that time three major economic objectives behind demonetization was visualized which are fighting black money, fake notes and creating a cashless economy by pushing digital transactions. Among those targets, the biggest one was dealing with black money. Black money refers to cash that is not answered for in the banking system or cash on which tax has not been paid.

Cash is king amid digital push

Later, the creation of a cashless economy was hawked as another major target of demonetization. How has this picked up? Cash has proved that it remains its position in economy as King in the post note-ban years. As per the RBI data currency in circulation had gone up to Rs 29.17 lakh crore on October 29, 2021, from Rs 16.4 lakh crore in 2016, as on March, 2020.

Digital Payment’s position

Digital payments have increased. UPI payments alone have increased to $100 billion in value in October. The number is gone up across all digital payment channels. So, what is the takeaway here? People also fill free to spend in cash to a large extent, even though there is an increase in digital transactions. This might be pointed out that digital channels have picked up even without the highly disruptive economic move.

Question & Answer on 5 Years of Demonetization

Q1. On which day demonetization was announced?

Ans. 8 November 2016

Q2. Which two denominations were declared as non-tender in demonetization?

Ans. Rs.500 and Rs.1000

Q3. What are the main objectives behind this decision?

Ans. 1.Fighting black money, 2. Curbing Fake Notes and 3.Creating a cashless economy by pushing digital transactions.

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