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Placement Preparation - A Guide To Demonetization And Black Money

Sep 8, 2017 | 4 minutes |

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On 8 November 2016, PM Modi announced on national TV that currency notes of Rs 500 and 1000 cease to be a legal tender from midnight. The reason that he gave in the very elaborate speech was to curb the menace black money, fake notes and funding to terrorist groups. As per the arrangements made by RBI, new notes of Rs 2000 and 500 were printed, old notes were mandated to be exchanged by 31st Dec. It is being said that idea of Demonetization came from a presentation made by Arun Bokil, member of Pune based Arthkranti. Here's the link to the presentation made by Bokil. Initial Impact: 86% of India’s currency notes were in the denomination of 500 and 1000 in November, 2016. This created a distinctive chaos amongst people for sure. While Government claimed that they were preparing for Demonetization for almost 9 months; ex-governor of RBI, Raghuram Rajan, whose term ended in Sep 2016, recently disclosed that preparation from Demonetization didn’t start till his term. National productivity was estimated to take a dip due to queues for changing the currency notes. The economy was expected to take a hit due to lack of liquidity in the system. Several deaths were being reported of people who were standing in queues or didn’t have money to pay hospital bills. By end of December, RBI estimated that close to 90% notes of 500 and 1000 have already come back into the system. Situation after 10 months: My take on the Issue: