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
                Reply
                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
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