DEMONETIZATION AND ITS IMPACTS

Abstract

On 8 November 2016, the Government of India announced the Demonetization of all 500 and 1000 banknotes of the Mahatma Gandhi Series. The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism. Demonetization is an act of cancelling the legal tender status of a currency unit in circulation. Anticipating positive changes on the liquidity structures as a whole, nations often adopt Demonetization at some or the other point to control situations such as inflation and to boost economy. In November, Indian government banned the high denomination notes of Rs 1000 and Rs 500 as move to curb counterfeiting and money laundering. The changes did invite a lot of trouble to public in the beginning but it all seemed worth that, as far as the long terms effects were concerned.