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Demonetization means the withdrawal of currency used as legal tender. The Indian Government, on 8 November 2016 demonetized the ₹1000 and ₹500. In the process of doing so, units of currency are completely banned for use by any of the public individuals or any government official. This means that the old currency immediately turns into scrap that is to be either replaced or deposited at the banks. In this blog, we are providing samples of essay on demonetization. Let us explore them now.
Table of Contents
Essay on Demonetization in 100 Words
| The scrapping of the currency by the government to prevent it from being used illegally is called demonetization. The currency, after being demonetized by the government, instantly turns to scrap and loses its market value. After demonetization, a new currency is issued by the government, thus replacing the old one. The main goal of demonetization is to target tax evaders and black money hoarders and put an end to their plans. The information of demonetization is kept a secret because if it gets leaked, the corrupt people will have plenty of time to convert their black money into legal forms like gold, land, etc. Hence, the sudden implementation of demonetization is necessary. |
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Essay on Demonetization in 400 Words
The legal banning of coins and notes of a particular value is known as demonetization. That currency may or may not get replaced by a new currency. Many problems are targeted by demonetization namely naxalism, illegal funding, tax evasion, counterfeit currency, etc.
Demonetization in India
On 8th November 2016, effective from 20:15, the Indian Prime Minister Shri Narendra Modi announced the demonetization of Rs 500 and Rs 100 notes. This was the third time that India witnessed demonetization.
Before this, on 12th January 1946, demonetization was implemented by the colonial regime. At that time, India was being governed under the Government of India Act 1935. The decision was to ban 10 Pound notes to check tax evasion, etc. The second demonetization was done after the Independence on 16th January 1978. At that time, the currency notes of Rs 1000, Rs 5000, and Rs 10,000 were banned. In both the above-mentioned scenarios, the currency was not replaced by new currency while in 2016, it was replaced by new currency units.
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Effects Demonetization in India
Demonetization had many effects on national economies. For centuries, it has been used as a tool to stop corruption and other illegal activities and, hence bring untaxed into account. It basically serves as a countermeasure for many anti-national activities. It also helps in bringing untaxed wealth into the main street. India has had Naxalism for decades now and their funding includes sources from both within the country and outside the country. Instantly demonetising the currency, their money becomes useless thus stopping their anti-national funding. And to get it either replaced or deposited at the banks, they have to come out of the shadow.
Conclusion
From time to time, governments all across the world have done demonetization in the past century. The demonetized currency may differ but the objectives remain the same, which is to
Counter inflation, stop illegal activities, etc. This also brings the unaccounted money under the radar of the tax agencies which eventually leads to the erasing of large amounts of untaxed cash by corrupt individuals. Demonetisation is crucial to getting the economy of a country back on track and its sudden implementation brings an element of surprise that doesn’t allow individuals to escape from the grasp of the government.
Benefits of Demonetization
The announcement of the withdrawal of INR 1000 and INR 500 from the Indian market came as a big blow to everyone on 8 November 2016. However, the lawmakers were aware of the long-term benefits of implementing demonetization and were determined to do so. Here are the key benefits promised by demonetization.
- Curbs Corruption: Unaccounted and undeclared money leads to corruption. Hence, demonetization is a great way to decrease corruption and bring corrupt people to light.
- Boosts Cashless Economy: In many ways, demonetization is effective in making a country into a cashless economy and digital transactions are easier to track as they come under the radar of the government.
- Brings Untaxed Money into Mainstream: Demonetization helps bring untaxed money back into the mainstream thus helping the farmers, businessmen, etc.
- Acts as an Instrument to Fight Anti-National Activities: Demonetization is a great way to terminate many anti-national activities by disrupting the funding of criminal groups, naxalism, etc.
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FAQs
Ans: The scrapping of the currency by the government from being used illegally is called demonetization. The currency, after being demonetized by the government, instantly turns to scrap and loses its market value. After demonetization, new currency is issued by the government thus replacing the old one.
Ans: The demonetized currency may differ but the objectives remain the same, which is to Counter inflation, stop illegal activities, etc. This also brings the unaccounted money under the radar of the tax agencies which eventually leads to the erasing of large amounts of untaxed cash by corrupt individuals.
Ans: Demonetization was first implemented in 1946 when currency notes of INR 1,000 and INR 10,000 were removed from circulation.
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