In demonetisation, Modi has accepted a long standing demand to scrap high denomination notes

The move now follows the culmination of the government’s black money disclosure scheme where over Rs 65,000 crore of black money and undisclosed assets were disclosed to the government.

Written by Kanishka Singh | New Delhi | Updated: November 9, 2016 12:58 pm
Demonetisation, india demonetisation, Indian currency, 500, 1000, notes, notes scrapped, Narendra Modi, Reserve bank of india, india news, indian express According to an Assocham study, Rs 500 denomination notes account for at least 46 per cent of the banknotes in circulation and Rs 1,000 notes account for around 40 per cent of the total notes in circulation. (Source: AP Photo/File)

Prime Minister Narendra Modi announced Tuesday evening that higher denomination Indian currency notes of Rs 500 and Rs 1000 will be demonetised. Demonetising the Rs 500 and Rs 1,000 denomination notes will affect 86 per cent of the bank notes currently in circulation. These currency denominations are used largely by people stashing black money and for funding criminal and terrorist operations. Also, counterfeit currency of these denomination has been hurting our economy for long. The move now follows the culmination of the government’s black money disclosure scheme where over Rs 65,000 crore of black money and undisclosed assets were disclosed to the government.

WATCH VIDEO: Rs 500 & Rs 1000 Illegal: Scuffle At An ATM With People Queuing Up To Withdraw Money

But the idea of this demonetisation has been floating around for quite a while now. Demands started coming as early as in 2010 to demonetise the Rs 500 and Rs 1,000 notes. Yoga Guru Baba Ramdev, who has been a anti-black money crusader for several years now, started a public demand and campaigned for demonetisation of these bank notes and bringing all black money from offshore and inhouse stashes.

According to an Assocham study, Rs 500 denomination notes account for at least 46 per cent of the banknotes in circulation and Rs 1,000 notes account for around 40 per cent of the total notes in circulation.

Economist Ajit Ranade called for scrapping higher denomination notes last year as he argued that higher denomination notes of Rs 500 and Rs 1,000 are highly unlikely to be used for day-to-day common transactions. Knowing the fact that higher denominations are not feasible for normal transactions, the governments and the RBI over the past few years have increased the number of these notes in circulation for encouraging electronic transactions. Paper currency not only adds to unaccounted cash, but it also increases financial strain on the RBI for printing of the currency along with its maintenance, authentication and distribution.

Again the demand for decommissioning a large amount of currency to fix the huge mismatch in large and small denomination currency for daily transactions. As much as 94.4 per cent of the currency in circulation was decommissioned in 2012 and much of it was large denominations. A larger proportion of Rs 100 notes were infused into the market to phase out the older notes which were easier to counterfeit.

The demand went up again in 2014 when the Modi government came to power. An SIT was formed to tackle the black money issue. After the black money disclosure scheme, this is seen as the next big step to cleanse the economy. The government is soon set to introduce newer Rs 2000 denomination banknotes to ease the process.

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  1. R
    Rattihallirao
    Nov 9, 2016 at 7:53 am
    The question is who has or how many have stacked Indian currency, most of stackers are either have Gold and Diamond jewellary or foreign currency. Ordinary people must have indian currency of 500/1000 demomination. Stackers of Indian rupees areTerrorists/Industrialists/traders?lt;br/gt;Answer is relatively NO. Again new 500/2000 notes are coming. Any control on gold and diamond jewellary or foreign currency? Mr. Modi has to mesmerise.
    Reply
    1. R
      Ravi
      Nov 12, 2016 at 4:51 pm
      Very good move by our PM.It is time that India moves towards cashless transactions to get rid of black money. ried group will be the one which will benefit the best since there are lot of people (kirana stores, contractors etc) who earn huge amounts but never pay any tax due to all their payments being done in cash. Its time these people also come into the tax bracket and overall taxes reduce in the country.
      Reply
      1. B
        Bijan Mohanty
        Nov 9, 2016 at 7:25 am
        The entire move has resulted in harment to common man only and is a political stunt by modi. News coming that people with high level of black money are converting it to gold and gold price has surged by about rs800 per 10 gm overnight.
        Reply
        1. T
          T DUTTA
          Nov 9, 2016 at 2:09 pm
          DEMONETISATION IS A TECHNIQUE OF FIGHTING BLACK MONEY
          Reply
          1. T
            T DUTTA
            Nov 9, 2016 at 2:11 pm
            DEMONETISATION IS FINANCIAL CURFEW
            Reply
            1. T
              T DUTTA
              Nov 9, 2016 at 2:08 pm
              DEMONETISATION IS NOT ILLEGAL
              Reply
              1. T
                T DUTTA
                Nov 9, 2016 at 2:10 pm
                WHEN THERE IS A LAW AND ORDER PROBLEM SOMETIMES CURFEW IS IMPOSED----SIMILARLY IF THERE IS A PROBLEM OF BLACK MONEY, MONEY LAUNDERING ETC THEN FINANCIAL CURFEW SHOULD BE IMPOSED
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                1. M
                  M. Fazal
                  Nov 9, 2016 at 9:36 am
                  Rs 2000 denomination notes to more than double the black money I think in 50:50 partnership with his black color close ociates like Adani
                  Reply
                  1. A
                    Abhishek
                    Nov 9, 2016 at 10:26 am
                    Very Good and BOLD move!! But not sure if new 500 and 2000 notes are coming with Nano GPS technology for tracking or Just a rumour.. otherwise will have same situation after 5 years..
                    Reply
                    1. V
                      VINAY KUMAR
                      Nov 9, 2016 at 7:24 am
                      Too precise but too late. Unprecedented positive historic decision in favour of mother land. Good Show.
                      Reply
                      1. A
                        anandap
                        Nov 9, 2016 at 10:40 am
                        Those counterfeit note printers in home/abroad, hawala dealers, underworld bulk money keepers, corrupt politicians, bureaucrats, professionals alike may have stroke for denomination of money! How come opposition politicians are against the decision? Are they belong to the above? In case of Am admi''s difficulties they are hled, humiliated and cheated by all since independence. Even 5 cents land fixation or a ration card or police station complaint these am admi has been struggling life long humiliation by begging in front of taluk supply or revenue/village offices/police sations. They have no problem for daily humiliation and harment of Am admi, in all government offices, Police stations and hospitals but two days practical difficulty of changing one or two 500, 1000 notes, is a big problem for them!.
                        Reply
                        1. M
                          mathimathi
                          Nov 9, 2016 at 4:10 pm
                          Is any denomination of ours Indian Rs bring back a promise 1$= Rs 40 instead of 1$= Rs 66.53 crossing PM ModiJi age in today's value?
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                          1. M
                            M. AHMAD
                            Nov 9, 2016 at 11:11 am
                            IT IS EASY TO STASH RS. 2000 NOTES THAN RS. 1000 NOTES AS ONE NOTE IS EQUAL TO TWO NOTES.
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                            1. M
                              M. AHMAD
                              Nov 9, 2016 at 11:09 am
                              IT IS NOT UNDERSTANDABLE INSTEAD OF ISSUING NEW NOTES OF RS, 1000 LIKE RS.500 NOTES GOVERNMENT OPTED FOR RS. 2000 NEW NOTES. NOW WE HAVE RS.500 AND NEW RS. 2000 NOTES. WHAT IS THE REASON BEHIND THIS ONLY PM AND FM KNOWS. MIGHT BE RS. 500 FOR GENERAL PEOPLE AND RS. 2000 FOR UPPER CL PEOPLE WHICH CAN EASILY DOUBLE THE BLACK MONEY IN COMING DAYS HALF TIME. SO., NO HARM TO UPPER CL PEOPLE IN LONG RUN. MOREOVER, THERE IS ALWAYS A SEQUENCE IN ORDER OF EVERY DENOMINATION OF NOTE WHICH STRANGELY MISSING HERE . WE REACH FROM RS. 500 TO RS. 2000 . ONE THING MORE WHY NOT GOVERNMENT DISCLOSE THE NAME OF SWISS BANK ACCOUNT HOLDER AND HOW MUCH MONEY BROUGHT FROM THESE ACCOUNT HOLDERS AND ALSO THE NAME OF PANAMA PAPER LEAKS.
                              Reply
                              1. H
                                Hari
                                Nov 9, 2016 at 9:53 am
                                Modi govt has done yeomen services for poor of the country who are looted by corrupt politicians in power since independence. This is the first time in 70 years that Modi has come as God gifted man to save the life of billion of people who are virtually made bankrupt by past Congress govt run by Nehru dynasty. The regional and smaller parties mushroomed due to the utter failure of Congress govt in past who promoted rampant corruption and a major portion of development funds are completely looted. Modi govt should take next step to seize all ets of corrupts for developmental activities and all corrupts must be punished in time bound manner within six months. Thereafter, none of corrupt will dare to loot public money in future.
                                Reply
                                1. M
                                  mohan
                                  Nov 9, 2016 at 9:33 am
                                  During the 10 years of UPA rule, many people had invested in real estate, gold and diamonds. Bigger barons invested in swiss banks. People like YSR had a parallel private army (Maoists) to protect his wealth
                                  Reply
                                  1. M
                                    mohan
                                    Nov 9, 2016 at 10:57 am
                                    The new scheme should also track the Currency path. A currency note is uniquely identified using the serial number. While issuing the new notes the serial numbers should be recorded in a computer along with the ID card details and bank code should be printed in the blank space of the note. Scanners can be used for capturing the serial numbers automatically using a scanner or counting machine. The recorded serial numbers should then be sent to a Data Warehouse environment using the BIGDATA technology currencypath.blogspot
                                    Reply
                                    1. S
                                      Somnath Banerjee
                                      Nov 22, 2016 at 11:43 am
                                      Respected Prime Minister Sir,lt;br/gt;lt;br/gt;Please think about the abnormal Kalobazari doing by the businessmen in this crisis of note demonetisation. Please red the cold storage and those who stopped to marketised the essential commodities. Heavy crisis in fish market and Bank also not co-operated with the common people. Your move is good but please ensure that the common people should not be harred and the black markeiter should not get making any profit in this time.
                                      Reply
                                      1. C
                                        Curious onlooker
                                        Nov 9, 2016 at 7:04 am
                                        Devaluation of currency is normally accepted as a way of saving the nation from bankruptcy. But selective demonetisation of currency notes that are in circulation is a violation of solemn trust undertaken by the government to its people and the international community to maintain it as lawful currency to be tendered in payment of debt.
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                                        1. T
                                          tru jay
                                          Nov 9, 2016 at 8:46 am
                                          Now there is an increase of rs 4000 in gold price in 1 day
                                          Reply
                                          1. D
                                            Daisy boy
                                            Nov 9, 2016 at 7:05 am
                                            In other words, the BJP has accepted that its lost the forth-coming elections to UP, Punjab, Gujarat emblies. and when you have lost it, better demonetize the bigger bills - may be in the general elections of 2017, this move would come handy.
                                            Reply
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