con’s of demonetization

CON’S OF DEMONETIZATIONPresented By:- Nikhil Shekhar

Sabyasachi das

Sunny Mervyne baa

Vikash Kumar

XAVIER INSTITUTE OF MANAGEMENT JABALPUR 2

DEFINITION OF 'DEMONETIZATION'

Demonetization is the act of Stripping a Currency Unit of its status as legal tender. It occurs whenever there is a Change of National Currency. The current form or forms of money is pulled from circulation and retired, often to

be replaced with New Notes or Coins. Sometimes, a country completely replaces the old currency with new currency. The opposite of demonetization is Remonetization, in which a form of payment is

restored as Legal Tender.


BREAKING DOWN 'DEMONETIZATION'

There Are Multiple Reasons Why Nations Demonetize Their Local Units Of Currency.

To Combat Inflation

To Combat Corruption And

Crime (Counterfeiting,

Tax Evasion)

To Discourage A Cash-dependent

Economy

To Facilitate Trade

4

DEMONETIZATION IN INDIA In an important move, the Government of India declared on 8th November

2016 that the Five Hundred (₹500/-) and One Thousand (₹1000/-) notes will no longer be legal tender from midnight today.

The RBI will issue Two thousand rupee (₹2000/-) notes and new notes of Five hundred (₹500/-) will be placed in circulation from 10th November 2016.

Notes of One Hundred (₹100/-), Fifty (₹50/-), Twenty (₹20/-), Ten (₹10/-), Five (₹5/-), Two (₹2/-) and One (₹1/-) rupee will remain Legal Tender and will remain unaffected by this decision.

This measure has been taken by the Honorable PM Sri. Narendra Modi in an attempt to address the resolve Against Corruption, Black Money and Fake Notes.

XAVIER INSTITUTE OF MANAGEMENT JABALPUR


DEMONETIZATION• The Demonetization

removed high-value notes of ₹500/- and ₹1000/- from market making them invalid for the daily transaction.

• As promised by Honorable Minister, government ₹2000/- notes came into the market with limited dissension capacity from ATMs as well as from Bank Counters.


CASH CRUNCH :

• As, the small denominations are accounted to only 14% to 15% of the Total Currency in the market, more and More Small Denominations would have been supplied.

• Assuming that the currency may not be supplied in a large number, due to the ideology of Digitalizing The Currency.


CURRENCY DESTRUCTIO

N : • Black money holders are

Burning and Destroying the cash.

• This is going to be a big Loss To Economy.

• Dollar prices have already crossed ₹ 68/-.

• The decision to change all the currencies will at least cost ₹ 12,00 Crores to Reserve Bank of India(RBI).


LOSS OF BUSINESS :

• Due to Demonetization, the business has been Negatively Affected as the Vendors don’t have enough change to return to their customers.

• Some of them are still accepting credits and the old currency, but still, people are spending less than they used to.

• This has even Affected Restaurants and Other Business which accepts digital mode of payment.


EXPLOITATION:

• As it is hard to get your hands on the new currency without standing in a queue,

• Those who are in urgent need of money are getting the currency exchanged from others for Commissions Ranging Up To 40%.

• Owners of Petrol Pumps and Other Services are demanding the customer to avail their service for a minimum of ₹ 500/- or ₹1,000/-.

• Some Black Money Holders haven even hired people to stand in queue for them throughout the day to get their note exchanged for a small commission.


ECONOMIC SLOWDOWN

: • Major industries like real Estate, Infra, Gold etc. have been affected and sales would come down and that impacts the growth of the economy.

• Many Transactions Halt, until the markets gets back to normalcy.

• Markets may see a temporary fall, and temporary recession.

• At least a year would be the span to retain the normalcy.


REAL ESTATE :

• As demonetization hits real estate industry very badly, people has now got no clarity on how to go ahead in terms of buying a land or a house.

• Government has to come up with some sort of Awareness Campaigns about how the future of real estate could be seen,

• Whether any New Laws comes in to picture.

• If customers has to wait or may go ahead and buy them?


THE NEW DIGITAL LAWS :• A step towards a cashless

economy is a great step, but government has to bring in more laws, that helps people understand about the safety in digital banking.

• It is the governments responsibility to make people aware about, how safe and good, the Digital Banking is.

• There are high charges now for Digital Transactions like at POS, Internet Banking etc., which has to come down.


RECALIBRATION OF ATM'S

:• Recalibrating ATM's was not done at a great pace as it has to be done in such critical situations.

• May be Cash Crunch and Recalibration Of ATMs are both wontedly done in order get people into digital mode.


INCONVENIENCE TO

COMMON PEOPLE

• Common People are in big trouble because of the Non Availability Of Cash for some days. Whole country is standing in long queues.

• Banks and ATMs do not have enough currencies to entertain everyone.

• We can see at your nearest ATMs and Banks .

• Over 100 people have been already dead in 3-4 days.

• There are more than 30% who don’t use bank accounts.


CORRUPTION AT DIFFERENT LEVELS :

Indian Banking System is supposed to be one of the Most Stable, Rigid and Strongest across the globe. Our banking system is so strong that it could even face and Withstand The Global Recession In 2008,

This bold step lead to many Banking Frauds and Illegal Transactions across the country. Bankers, Currency Chests and may be a few at RBI, played a major role in the Frauds Post-

demonetization. Police, CBI and I-T raids are just seeing shocking and disturbing figures of new currency been supplied illegally.

Also, Poor people are Prone To Corruption. There are huge deposits in Jan dhan accounts, bank accounts of poor people, which shows even

Poor People are Corrupted and are ready to save the corrupted.


BIG FISHES WILL BE

LEFT OUT • Big fishes means The

Defaulters who are actually responsible for Black Money will be left out.

• Since, they have money in form of Lands, Golds or they have money in Foreign Accounts.

• They will not be in trouble due to Demonetization at all.

• That’s why we cannot see any rich people standing in queues.


NOT AS EFFECTIVE

• Demonetization was mainly targeted at Black Money Holders, but they have found a way around it by getting the currency exchanged from others for a commission of 20% to 40%.

• Some people have died.• There are even variations in

some of the Printed Notes.


CONCLUSION

Pro VS CON


• The advantages are much dominating and it will be in the long term interest of our country comfortably outweighing the disadvantages.

• Government need to take all the necessary steps so as to ensure that there will be a smooth flow of currency exchanges.

• It would turn into chaos if government takes no necessary steps to circulate money correctly.

• It will make a massive change in our economy.


THANK-YOU

con’s of demonetization

Government & Nonprofit