What are the advantages and disadvantages of demonetisation?
Table of Contents
- 1 What are the advantages and disadvantages of demonetisation?
- 2 What was the reason behind demonetization in India?
- 3 What is the disadvantages of demonetization?
- 4 Is Demonetization A solution to the problem of black money?
- 5 What is the impact of demonetization on the Indian economy?
- 6 How demonetization of currency can prevent tax evasion?
What are the advantages and disadvantages of demonetisation?
A Comparison Table for Advantages and Disadvantages of Demonetisation
| Advantages | Disadvantages |
|---|---|
| Demonetisation can result in a decrease in tax evasion by individuals and ensure the implementation of practical public measures. | Every ATM in the country needs to be remodified to allow the exchange of currency. |
What was the reason behind demonetization in India?
The sudden demonetisation was premised on the idea that “black means cash”. And, it is in high-denomination currency notes that black money would be held. So if the high-denomination notes were to be suddenly declared as illegal tender, then the black money of the rich would become null and void.
What is the disadvantages of demonetization?
Disadvantages of Demonetisation The biggest disadvantage of demonetisation has been the chaos and frenzy it created among common people initially. Everyone was rushing to get rid of demonetised notes while inadequate supply of new notes affected the day to day budgets of citizens.
What are the effect of demonetization?
Demonetisation lowered the growth rate of economic activity by at least 2 percentage points in the quarter of demonetization, said a working paper entitled ‘Cash and the Economy: Evidence from India’s Demonetisation. ‘
What is demonetization and how does it work?
Demonetization Meaning Demonetization in layman’s term is the eviction of a particular currency/tender present in the economy from circulation and thus replacing the same with a new currency which may aim for several outcomes like the corruption-free economy, black money removal, controlling inflation, stop funding of illegal activity, etc.
Is Demonetization A solution to the problem of black money?
The report concluded that demonetization may not be a solution as black money was largely held in the form of benami properties, bullion, and jewellery. Such a measure would only increase the cost as more currency notes which have to be printed. It could also harm the banking logistics
What is the impact of demonetization on the Indian economy?
The scarcity of cash due to demonetization to led to chaos, and most people holding old notebooks faced difficulties exchanging them due to endless lines outside banks and ATM across India, which became a daily routine for billions of people waiting to deposit or exchange the 500 and 1,000 banknotes since 9 November.
How demonetization of currency can prevent tax evasion?
Demonetization of currency can also prevent tax evasion, as those that are evading taxes must exchange their existing currency or risk their money becoming worthless. In the currency exchange process, the government can catch those who have evaded taxes and retroactive tax their unreported earnings.