Demonetization in India Samples for Students †MyAssignmenthelp.com

Question: Discuss about the Demonetization in India. Answer: Demonetization in India On 8th of November, 2016, Mr. Narendra Modi, the prime minister of India announced on live television at 8 pm news that left the whole could try in shock. The declaration said that the country's 500 and 1000 rupee notes shall no longer be valid come 9th November, 2016. Leaving millions of people in awe and shock, the prime minister took some really bold steps. The strong decision of Modi was hailed by many people, while poor were shocked by the move(Jain 10). While people believe that this had been done in order to curb corruption, bribery and black money in the country, economists say the same was done to avoid tax evasion. A country with a population of around 1.3 billion was left helpless with people unable to figure out where to hide their black money. According to statistics, only about 1% of this population pays taxes in the country. However, after this decision of demonetizing 500 and 1000 rupee notes, more people shall have to pay taxes. Even though this moved caused a lot of irritation and agitation amongst the common public, most of the people do realize that this step shall have positive implications in the long run. Through this many people in India were forced to go with the digitization methods for making their payments that included debit cards, bank transfers and e-wallets. (Shepard 5). According to the money market, the economic situation in the country changed quite quickly. The money market is basically a short term debt market that helps in dealing with different money market instruments. A lot of the people were left with no option but to shift to more advanced methods of cash payments and transactions such as online transfers, net-banking as well as using debit and credit cards. It was observed at the week end of 9 December 2016, that the currency with the public in the total money supply that further reduced to 39.1% (Srija 11). This is accordance with RBIs Weekly Statistical Supplement. Between the time periods from 28th October 2016 to 9th November 2016 there was a sharp decline of about 54% of the total currency in the country which accounted for 9204.3 billion rupees. All of the old notes were no longer valid and in great number. However, the government did not have enough new notes to supply to the population of the country. As seen in the graph below, d ue to this the money supply moved left. In response to this, the money demand shifted towards the right. This was due to the fact that there wasnt enough cash available to the people for them to be able to purchase things and so the demand for money or cash increased. In the long run however, people are now using more digital and cashless ways of spending their money make and receive payments and buy and sell things. Therefore, in the long run, the demand for cash has decreased. Image source: https://study.com/cimages/multimages/16/demand-decrease-shift-graph.jpg The above graph shows how a decrease in the money supply causes the demand to shift to the right. Bibliography Anonymous.20. "Money Market Definition." 23 November 2010. Economy Watch. 28 November 2017 https://www.economywatch.com/market/money-market/money-market-definition.html. Jain.10, Ravi. "Indian Currency Demonetization: Advantages and Disadvantages." 7 September 2017. Good Returns. 28 November 2017 https://www.goodreturns.in/classroom/2016/11/indian-currency-demonetization-advantages-disadvantages-517945.html. Shepard.5, Wade. "How India Is Surviving Post-Demonetization." 29 July 2017. Forbes.com. 28 November 2017 https://www.forbes.com/sites/wadeshepard/2017/07/29/how-india-is-surviving-post-demonetization/#132b06ca1164. Srija.11, Ananya. "Money Market After Demonetization." 7 January 2017. ies.gov.in. 28 November 2017 https://www.ies.gov.in/pdfs/money_market_after_demonetisation_Jan_2017.pdf.