Discontinuation of higher currency notes: Pros and Cons
I am Mayank Garg. Yesterday, the central government announced that notes of Rs.500 and Rs.1000 would no longer be acceptable and declared illegal. While this move has its fair share of supporters there are also those who do not feel that this move would serve its purpose. Central govt.’s main aim behind this move was to reduce the amount of black money in the Indian market. It will also help in reducing the amount of counterfeit currency in circulation at present. So, here I will sum up the major points of this policy and its points of support and detraction.
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Major points of this policy
- Prime Minister Narendra Modi on Tuesday announced that Rs. 500 and Rs. 1000 notes will no longer be accepted as a form of currency.
- Current holders of notes of these values can exchange theirs at banks and post offices from 11th November onwards i.e. from Friday.
- Notes of value exceeding 4000 cannot be exchanged at one point until 24th November.
- New notes of Rs. 500 and Rs. 2000 will be available at ATMs from 10th November onwards in most places.
- Exchange of notes will not be done after 30th December 2016.
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Pros of this policy
- Reduction in the amount of Black Money: This policy acts as an ultimate punishment for the black money holders. This move will definitely see their black wealth reduced to its fraction.
- Reduction in the amount of fake money: Due to this move fake Rs. 500 Rs. 1000 are now a complete waste thus leading to them being reduced in the market.
- Helps to fight terrorism funding activities: Since funding of terrorist organizations relies on fake currency, this policy will help in fighting it.
- Paper Money replaced by Plastic Money: This policy also issues an upper limit on withdrawal of money from ATMs and bank accounts, thus slowly leading to paper transactions being replaced by card transactions.
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Cons of this policy
- Inconvenience to the people: This move definitely leads to some amount of inconvenience for the common people. Initially, banks and post offices will be filled with people trying to exchange notes.
- Initial Lack of Money: Notes of Rs. 500 and Rs. 1000 make a major part of the currency currently in circulation. Due to the people exchanging these notes as quickly as they can, there will be a lack of capital in the market in coming weeks.
- A loss to common people: While this move helps in reducing the black money and counterfeited notes, there might be those who unwillingly have fake notes and will get the shorter end of the stick.
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We at SAIKISITE appreciate this move by the Central Government and Prime Minister Narendra Modi. If this move is implemented properly then it will certainly Indian economy in the long run. At the same time, it’s side effects will help in the stability of the nation as a whole.
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