Effects of DemonetizationThe term demonetization means an act of disposing a currency unit of its status as legal tender or withdrawal of a particular form of currency from circulation.
What is the impact of withdrawing Rs. 500 and rs. 1000 notes from the market? Why this removal take place? What was the need of this step?
Well, there are many questions arises whenever we think about Demonetization. Some are getting positive responses and others negative. So what exactly Demonetization is doing in India.
In January 1946, 1000 and 10000 rupee notes were withdrawn and new notes of 1000, 5000 and 10000 rupee were introduced in 1954. The Janata Party coalition government had again demonetized banknotes of 1000, 5000 and 10000 rupee on 16 January 1978 as a means to curb counterfeit money and black money.
Demonetization is a critical move that has been taken by Narendra Damodardas Modi (Prime Minister of India since 2014). Prime Minister Narendra Modi announced on 8 November 2016 that circulation of all ₹500 and ₹1000 banknotes of the Mahatma Gandhi Series as invalid effective from the midnight of the same day, and announced the issuance of new ₹500 and ₹2000 banknotes of the Mahatma Gandhi New Series in exchange for the old banknotes.