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Presented by
Aditya B. Rao - 1627702

No More a Legal Tender

PART - 1
MEANING OF
DEMONETIZATION

WHAT?
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accept

PART - 2
F
O
Y
N
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O
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N
T
O
A
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R
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C
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N
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A
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WHO & HOW??

O BRIBES VARIOUS GOVT. OFFICES
O BUILDERS DIFF. BETWEEN GOVT. RATE &

MARKET RATE
O EDUCATION INSTITUTIONS IN THE NAME
OF DONATION
O POLITICIANS FOR GETTING WORK DONE
O HAWALA CONVERTING LOCAL CURRENCY
INTO FOREIGN CURRENCY

CONTD
O Unaccounted cash gets created by giving &

accepting bribes by way of cash

O When things are done against the law to
escape
O In the name of party fund by large
companies who seek political favors
O Transferring cash to other countries after
creation of unaccounted cash
O Creation of a Parallel Economy (Rs.14
billion of unaccounted cash)

PART - 3
S
O
R
P
E
TH

BENEFITS
O Unaccounted money is stashed usually in

high denomination currencies such as Rs.500

& Rs.1000 (easy to maintain)
O Unearthing of unaccounted money by way of
demonetizing such currencies
O Once demonetized such currencies are no
longer valid
O Deposit boost into formal system (banks will
have liquidity & access to cheaper funds)

Contd
O Interest rates becomes cheaper (with

higher liquidity rates come down)

O Low interest rates will benefit various
types of borrowers (industries for capex
& normal borrowers such as home loan
etc.)
O Inflation to come down (with lesser cash
in hand inflation tones down)
O Boost to GDP the economic system to
get cleaner leading to growth

Contd
O Fiscal Deficit to reduce accounted cash in

the system boosts fiscal policy

O Govt. borrowing eases the burden of
borrowing reduces
O Transmission of monetary policy RBI gets
better picture of liquidity leading to better
transmission of rates
O Fear leading to being systematic fear of an
encore of demonetization brings discipline
with cash hoarders
O Soaring real estate prices to come down

THE BIGGEST BENEFIT

MY
L
O
A
N
I
O
T
I
C
G
E
I
S
D
LES
TO
N
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O A CASH
S,
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NETBAN
A
S &
E
B
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R
B
S
O LOWER
N EY
O
M
K
C
OF BLA

TH E

PART - 4
S
N
O
C

THE SUFFERERS
O Common man as always the biggest

sufferer will be the common man

O Logistical nightmare poor preparation
by govt. such as not calibrating ATMs for
new configuration of notes; low supply of
new notes; no sight of Rs.500 notes;
inadequate manpower at banks to handle
the rush; no change for new Rs.2000
notes; withdrawal limits are too low

Contd
O People

in villages with lack of

infrastructure to be the most affected
O People not yet used to cashless way of
leading life
O Big sharks who have stashed cash in
foreign currencies in tax havens, holding
by way of gold, by way of real estate may
still remain unaffected
O No political support from opposition

PART - 5

N
O
I
S
U
L
C
N
CO

The last nail in the coffin

O The move to surely hurt those who have

unaccounted cash
O Terrorism within the country to reduce
drastically
O Creates patriotism
O Motivates the young population & also the
financially excluded population to adopt
digital way of transaction that will have
long term benefits at the macro level

PART - 6

G
G
SU

S
N
O
I
T
ES

SUGGESTIONS
O Govt. should increase the cash supply
O Govt. should provide additional manpower

at banks to handle rush

O Govt. should speed up recalibrating the
ATMs quickly
O Govt. should seek support from the
opposition and other parties
O Govt. should focus on rural areas where
the hardship is more compared to other
locations

Welcome the new notes!

OTHANK YOU