ECONOMICS

HOLIDAY HOMEWORK

2017 - 2018
BY
UTKARSH AGRAWAL

9TH C
ECONOMICS PROJECT
DEMONETIZATION
Defination 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.
Did you know ?
THE OPPOSITE OF
DEMONETIZATION IS
REMONETIZATION , IN
WHICH A FORM OF
PAYMENT IS RESTORED
AS LEGAL TENDER .
 Background
Demonetization has been embraced in past by
Many Countries . Such as:
Country Year Denomination
United states 1969 $10000 , $1000
Ghana 1982 50 cedis
Zimbabwe 2010 One hundred
trillion dollar
Myanmar 1987 25- , 35- and 75-
kyat notes .
Australia 1996 Full series of
polymer bank
notes .
India 2016 Rupee 500 or
1000 notes .
why nations demonetize their local units of currency ?

To facilitate trade

To combat Corruption and Crime

To combat Inflation

To discourage a cash dependent

economy
 SOME EXAMPLES OF DEMONETIZATION :

The Coinage Act of 1873 demonetized silver as the

legal tender of the United States, in favor of fully
adopting the gold standard Several coins, including
two-cent piece, three-cent piece, and half dime
were discontinued. 
An example of demonetization for trade purposes occurred
when the nations of the European Union officially began to use
the euro as their everyday currencies in 2002. When
the physical euro bills and coins were introduced, the old
national currencies, such as the German mark, the French
franc and the Italian lira were demonetized. 
In 2015, the Zimbabwean government
demonetized its dollar as a way to combat the
country’s hyperinflation .
DEMONETIZATION
IN INDIA
 Beginning…

On 8 November 2016, the Government of India announced

the demonetisation of all ₹500 (US$7.80) and ₹1,000 (US$16)
banknotes of the Mahatma Gandhi Series.

 The government claimed that the action would curtail the

shadow economy and crack down on the use of illicit and
counterfeit cash to fund illegal activity and terrorism.
 Changes in currency
Prime Minister of India Narendra Modi declared
that use of all ₹500 and ₹1000 banknotes of
the Mahatma Gandhi Series would be invalid past
midnight, and announced the issuance of new ₹500
and ₹2000 banknotes of the Mahatma Gandhi New
Series in exchange for the old banknotes.
Old New
Impact of demonetization on India

In the days following the demonetisation, the country faced severe

cash shortages with severe detrimental effects across the economy

People seeking to exchange their bank notes had to stand in lengthy

queues, and several deaths were linked due to the rush to exchange
cash

  As the cash shortages grew in the weeks following the move, the
demonetisation was heavily criticised by prominent economists and by
world media.
Opposition faced by goverment
A Congress-led opposition which includes 13 political parties, opposed
the current government on the demonetisation issue in the Winter
Session of the Indian Parliament 16 November 2016. 

 The Chief Minister of West Bengal Mamata Banerjee also met the

President Pranab Mukherjee to oppose the demonetisation.

The demonetisation was opposed in both houses of the parliament , it

triggered organised nationwide strikes across India. Opposition
parties like Indian National Congress, Bahujan Samaj
Party, Trinamool Congress
 STOCK MARKET CRASH

GDP GROWTH RATE BUSINESS

DEATHS
BANKING IMPACTS

CASH SHORTAGE
AGRICULTURE

DIGITAL TRANSACTION
ATTEMPTING DEPOSITE WITHOUT PAN

DONATIONS IN TEMPLES
MULTIPLE BANK
TRANSACTIONS

EVASION ATTEMPTS

GOLD PURCHASING

BACKDATED ACCOUNTING

RAILWAYS BOOKINGS
 PROCEDURE
The plan to demonetise the rupee 500 and rupee 1000 bank notes began six to ten
months prior, and was kept highly confidential with only about ten people aware of
it completely. 

 The logistical processes and preparations for printing the new rupee 500 and
rupee 2000 bank notes began in early-May. 

The cabinet was informed about the demonetisation on 8 November 2016 in a

meeting called by the Prime Minister of India Narendra Modi which was followed
by Modi's public announcement about the demonetisation in a televised address.
 Advantages
1 . Demonetization will completely destroy
the Black money

2 Big increase in tax revenue

3 . No more funding to terrorist organization

 Disadvantages

1 . Inconvenience to common people

2. Currency destruction
3. Defaulters who are actually responsible
For black money will be left out
 CONCLUSION
There is no guaranteed that things will be better
in future . But it depend on many things like
how government track things in future .
Demonetization can be very useful for economy
if it successful . In past more than 5 countries
have use demonetization but none of them been
successful . Even some of them experience
heavy crisis in their economy . As you can see
demonetization having both advantages and
disadvantages
Thank you