Explains the demonetization and its impact on the economy.The RBI spent close to Rs 13,000 crore over the next two years to remonetise Indian money market in post-demonetisation phase. New notes of Rs 500 and Rs 2,000 were introduced. The designs were markedly different from the recalled ones. This escalated the cost of printing as it had several new features.

1. Two Years After Demonetization:
Impact on Indian Economy
TAZEENTAJ MAHAT

2. History of Indian currency
The Indian rupee (INR) is the official currency of
the Republic of India.
The rupee is subdivided into 100
paise (singular paisa).
The Reserve Bank of India manages currency in
India under the Reserve Bank of India Act, 1934.
.

4. In 2010, a new symbol for indian rupee was officially
adopted.
It was derived from the combination of
the Devanagari consonant “र” (ra) and the Latin capital
letter “R” without its vertical bar (similar to the R
rotunda).
The parallel lines at the top (with white space
between them) are said to make a reference to the
tricolour Indian flag, and also depict an equality sign
that symbolizes the nation’s desire to reduce economic
disparity.
The first series of coins with the new rupee symbol
started in circulation on 8 July 2011.

5. DEMONETIZATION
(DECLARED ON 8TH NOV AT 8:00 PM)
WITHDRAWAL OF A PARTICULAR FORM OF CURRENCY FROM
CIRCULATION.

6. w.e.f 9TH NOVEMBER -500/1000
NOTES BANNED

7.  1946: Rs1,000, Rs5,000, and Rs10,000 notes were taken out of circulation in January 1946. The Rs10,000 notes
were the largest currency denomination ever printed by the Reserve Bank of India, introduced for the first time in
1938.
 All three notes were reintroduced in 1954
 1977: The Wanchoo committee (set up in 1970s), a direct tax inquiry committee, suggested demonetization as a
measure to unearth and counter the spread of black money.
 However, the public nature of the recommendation sparked black money hoarders to act fast and rid themselves
of high denominations before the government was able to clamp down on them!
 The High Denomination Bank Notes (Demonetisation) Act deemed the Rs 1,000, Rs 5,000 and Rs 10,000 notes
illegal for the second time. At the time, then-RBI governor I.G. Patel disagreed with the measure.
 The sudden move to demonetize Rs 500 and RS1,000 currency notes is not new.
 Rs 1,000 and higher denomination notes were first demonetized in January 1946 and again in January 1978.

8. The highest denomination note ever printed by the Reserve
Bank of India was the Rs 10,000 note in 1938 but these
notes were demonetized in January 1946.

9. Higher denomination banknotes of rs 1,000, rs 5,000 and rs 10,000
were reintroduced in 1954 and all of them were demonetized in
january 1978.

10. Rs 500 note came into circulation in October 1987.
The Rs 1,000 note made a comeback in November
2000.
The move was then justified as an attempt to contain
the volume of banknotes in circulation due to
inflation.

12. On 28 October 2016 the total banknotes in
circulation in India was Rs17.77
trillion (US$260 billion).
 In terms of value, the annual report of
Reserve Bank of India (RBI) of 31 March 2016
stated that total bank notes in circulation
valued to Rs16.42 trillion (US$240 billion) of
which nearly 86% (around Rs 14.18
trillion (US$210 billion)) were Rs 500 and
Rs1,000 banknotes.
In terms of volume, the report stated that 24%
(around 22.03 billion) of the total
90266 million banknotes were in circulation.

13. NEW CURRENCY ISSUED BY
GOI

17. • While announcing demonetisation on
November 8 in 2016, Prime Minister Narendra
Modi had outlined three broad objectives to
fight black money, corruption and terror
funding. These objectives have always been
debatable for the lack of accurate verifiable
data.

18. Increasing govt. revenue

19. Increasing govt. revenue
1% of the country’s people are paying tax
95% transactions in India are made using cash
Demonetization resulted in Rs 14 lakh crore of Bank
deposits.
the money that is coming into the system has not
become white.
Just because it is in the banking system does not
mean it is legitimate.
It will invite taxes and penalties if required and will
have deeper scrutiny.

20. 
FAKE CURRENCY- CROSS BORDER TERRORISM
PAKISTAN USED A COMPLEX NETWORK OF COURIERS AND BANKS
TO FLOOD INDIA WITH COUNTERFEIT CURRENCY PRINTED AT
PAKISTANI GOVERNMENT MINTS
TO FUND TERROR OPERATIONS IN JAMMU AND KASHMIR, AS WELL
AS THOSE IN MAHARASHTRA AND GUJARAT, KARNATAKA, KERALA,
ANDHRA PRADESH, BENGAL AND BIHAR.

21. Fake currency- cross border drug
exchange

22. Incomplete planning- without visualizing
grass root realities

23. Unending queues outside
banks

25. CASHLESS ATMS

26. banks did not behave in the manner
they were supposed to
ATMS DID NOT FUNCTION PROPERLY
OLD CURRENCY WAS EXCHANGED FOR
COMMISSION OF 10 PERCENT, 15 PERCENT WHICH
CAME DOWN TO FIVE PERCENT LATER
IRRATIONAL ALLOCATION OF LIMITED
CURRENCY
LACK OF INFORMATION WITH BANKS

29. SLOW DOWN EVERY WHERE
Transportation halts: After the demonetisation was
announced, about 800,000 truck drivers were
affected with scarcity of cash, with around 400,000
trucks stranded at major highways across India were
reported.
 Agriculture: Transactions in the Indian agriculture
sector are heavily dependent on cash and were
adversely affected by the demonetisation.
 E-commerce companies saw up to a 30% decline
in cash on delivery (COD) orders.

30. IT raids and seizures
 The Finance Ministry instructed all revenue
intelligence agencies like Income Tax, Enforcement
Directorate (ED) and other agencies to join the
crackdown on forex traders, hawala operators and
jewellers besides tracking movement of demonetised
currency notes.
 As of 23 December, PMO received around 700 calls
giving information about black money.
 Huge amounts of cash in the form of new notes were
seized all over the country after the demonetisation.

31.  Gold purchases:In Gujarat, Delhi and many other major
cities, sales of gold increased on 9 November, with an
increased 20 to 30% premium surging the price as much
as Rs 45,000.
 Donations in old currency.
 People were also getting rid of large amounts of banned
currency by sending people in groups to exchange their
money at banks.
 As soon as the demonetisation was announced, it was
observed by the Indian Railways authorities that a large
number of people started booking tickets particularly
in classes 1A and 2A for the longest distance possible.
 People used the demonetised Rs 500 and Rs1,000 notes
to pay large amounts of outstanding and advance taxes.
As a result, revenue collections of the local civic bodies
jumped.

32. Reactions: mixed initial reactions
SUPPORTERS:
MD & CEO of SBI AND ICICI
Businessmen : Anand Mahindra , Sajjan Jindal , Kunal Bhal , N. R.
Narayana Murthy
International community: IMF, European commission, China media,
Singapore.
CRITICISM:
Chief Economist of the World Bank, Kaushik Basu,
Chief Ministers of several Indian states
Nobel laureates Indian economist Amartya Sen
Noted economist and journalist, T. N. Ninan

33. realty Check about the
preparedness

35. Digital india
Digital India is a campaign launched on 1 July 2015 by
the Government of India to ensure that Government
services are made available to citizens electronically.
Digital India consists of three core components:
 Creation of digital infrastructure
 Delivery of services digitally
 Digital Literacy

36. FEELERS:PRIOR LEAKAGE OF INFORMATION
 A fortnight before the official announcement, a
news report in the Hindi daily Dainik Jagran quoting
RBI sources mentioned about the coming release of
new 2000 rupee note alongside withdrawal of 500
and 1000 rupee notes.
 The Hindu Business Line on 21 October 2016 which
also mentioned about coming 2000 rupee note and
about possible withdrawal of 500 and 1000 rupee
notes.
 The chairman of the State Bank of India had also
openly spoken in April 2016 about the possibility of
demonetisation of Rs 500 and Rs1000 notes.

37. Promoting Digital india

38. • E Wallets – E Wallets have become very famous nowadays. After demonetisation, use of e wallets has
been implemented at a very large-scale. These e wallets allow users to make payments using your mobile
number or by scanning a QR code which takes place in a jiffy. All you need to do is simply download a
wallet like paytm.
• 2) UPI –UPI also known as Unified Payments Interface is another great way to go cashless. Unified
payments interface also called UPI is system of payments. Using unified payments interface, people can
transact using their smartphones. To pay using this system called unified payments interface, you need 2
important things: Smartphone and a Bank Account.
• 3) Plastic Money – Plastic Money means debit cards and credit cards that are used at ATM‟s for cash
withdrawal and POS machines while shopping. Having a debit or credit cards make you burden free from
carrying cash.
• 4) Net Banking – Net Banking is another handy way to get cashless transactions done. All you need is a
bank account with e banking facility enabled on it. You can transfer funds to others account from the
comfort of your home. There is no need of going to your bank to get transfers done. You can make all
payments and transfers yourself. This is a very convenient way to go cashless in India as well.
• 5) Aadhaar Card – Aadhaar Card enabled payment system allows a person to pay using his aadhaar card if
it is linked to his bank account. Once you link your aadhaar card to your bank, you can make payments
using your finger prints.

39. Promoting digital payments

42. • National Payments Corporation of India (NPCI
is pleased to announce that there has been an
impressive surge in the usage of cards at Point
of Sale (PoS) terminals at shops and other
retail outlets. During (November 9 and 10,
2016), Cards usage on PoS / e-Commerce was
around 8 lakh transactions a day compared
with a daily average of 4 lakh transactions
earlier. The value of transactions almost
doubled.

47. e Reserve Bank of India (RBI) has come out with its
annual report giving a balance-sheet of
demonetisation implemented 21 months ago. Of Rs
15.41 lakh crore demonetised currency notes of Rs
500 and Rs 1,000 denominations, only Rs 10,720
crore did not reach to the banks or the RBI.
This means only 0.7 per cent of demonetised
currency notes were junked in the exercise. The
government had initially expected that
approximately Rs 3 lakh crore of demonetised
currency notes would not come back to the banking
system, thus shedding the substantial weight of
black money

48. • The RBI spent close to Rs 13,000 crore over
the next two years to remonetise Indian
money market in post-demonetisation phase.
New notes of Rs 500 and Rs 2,000 were
introduced. The designs were markedly
different from the recalled ones. This
escalated the cost of printing as it had several
new features.

49. • Mohd, M. S. (2016). Demonetization of
Currency Notes: Significance and
Challenges. International Journal of Innovative
Research and Advanced Studies, 3(12), 60-64.

50. Thank you