What is DemonetizatioN
Origin of the word Demonetize:-
In Mid-19th century, the demonetize word has come from French word démonétiser whereas the word ‘dé’- is expressing reversal and the word ‘moneta’ is a Latin word which means ‘money’.
What is Demonetization?
The meaning of Demonetization in general word is to withdraw (money or the something like) from use.
What is Currency Demonetization?
Officially, stop using particular currency that is in form of note or coin.
What is the history of Demonetization in India?
The currency demonetization is not new in India. During British rule, exactly before the nation got independence from British, the Rs 1000, Rs 5000, and Rs 10000 notes were officially withdraw from use.
Again, in 1954, the Indian government has reissued the Rs 1000, Rs 5000, and Rs 10000 for reuse.
After that, once Janata Party alliance form the government and his legendary leader Morarji Desai demonetization the Rs 1000, Rs 5000, and Rs 10000 currency notes to crack the black money from the country.
Last year 2016, the Modi government has demonetized the Rs 500 and Rs 1000 currency notes with slogan the ‘fight against corruption’.
Demonetization in outside of India:-
Few years back, the twelve European countries has demonetized own currencies and replace with one common currency that is Euro.
Demonetization impact:-
For a time being, the currency Demonetization has affected may sectors in many ways like the black money holders are willing to eliminate the existing stock of black money, fake currency and this is benefited to our economy in the medium- to long-run.
1. Impact of demonetization on Telecom operators like Airtel/Reliance/Dish TV(Cable operator):-
As soon as news flashes into the industry by our Prime Minister for currency demonetization, like other sectors the Telecom sectors also noticed some immediate impact, which last for few days. The peoples residing on small cities and towns/villages are doing cash transactions and due to limited cash supply, they were in urgency to fulfil of other necessities.
2. Effect on parallel economy:-
After the currency demonetization, the black money holders has forced to destroy their old Rs 500 and Rs 1000 currency notes from the economy as the black money holders are not in a position to deposit the demonetized currency in his respective banks.
3. Effect on Gross Domestic Product:-
The shortage in money supply and simultaneous increase in bank deposits has affected the supply and demand scenario in the economy for the short term.
4. Effect on real state:-
Peoples have withdrawn their plan to buy a property as old Rs 500 and Rs 1000 currency notes were no longer the legal tender, and hence, this sector encountered an immediate downfall due to currency demonetization.
5. Online classified services:-
Many websites that belong to online buying and selling the properties, websites related to matrimonial are widely hits due to currency demonetization.
Demonetization impact on common PersoN
The common person in India is mainly doing their transaction in cash. Below are the few examples where they are facing the short-term issues.
1. Liquid cash shortage:-
After old currency ban, the person dealing with cash like vendors, auto rickshaw drivers, taxi drivers, daily wage earners and small traders are facing the shortage of Liquid cash.
2. Bank Fixed deposit interest rate:-
After the announcement of old currency ban, there have been huge cash deposits in banks. Therefore, some of the leading public and private banks have reduced the interest rates on deposits.
How Demonetization boosted to other Industry
Before November16, peoples are mainly doing the cash transactions. However, the sudden broadcast of the demonetization of Rs 500 and Rs 1000 currency notes has encouraged a new trend in the adoption of the digital payments across the nation.
1. Ecommerce and associated businesses:-
Generally, most of the ecommerce companies are providing the Cash on Delivery facility and due to currency demonetization, consumers have moved to cashless payment methods using the digital payment instruments. Online wallet companies are giving discount to promote the digital payment/cash less payment.
2. Public/Private Banks:-
Banks are seeing the significant rise of money deposits in saving/current accounts and consumers are being pushed to do the transactions via debit cards.
3. Rising on Credit card Users:-
Currency demonetization has given opportunity to the credit card companies a leg up the increase in transactions. To encourage the cashless transaction, credit card companies are providing various rewards points to their customers.
In last, this move will expressively eliminate the existing stock of black money, fake currency, Hawala Traders, Bookies, and Scrap Dealers. It will benefit the economy in the medium- to long-run.
Few questions are still open that how the government is going to stop the creation of black money in the future.
