The demonetisation of INR 500 and INR 1000 currency notes was a bold step taken by the Government of India on 8th November 2016. In consequence thereof, 500 and 1000 rupee notes ceased to be accepted as a form of legal tender in India w.e.f. 9th November 2016.
Although the scheme has received mixed responses from all over the country till date, it seems to be a positive and effective move for the betterment of Indian economy.
The Reserve Bank of India laid down a detailed procedure for the exchange of the demonetised banknotes with new INR 500 & INR 2000 banknotes as well as INR 100 banknotes. Following are the major highlights:
- Citizens can deposit the old banknotes held by them in their respective bank accounts till 30th December, 2016.
- Cash withdrawals from bank accounts will be restricted to INR 10,000 per day and INR 20,000 per week from 9th November 2016 till 24th November 2016.
- The old banknotes of value up to INR 4000 per person can be exchanged for the new INR 500 and INR 2000 banknotes as well as INR 100 banknotes at any of the bank branches from 10th November 2016 by filling up the required form along with a valid Identity proof.
- Banks will provide all cash withdrawal transactions at their ATMs free of cost to their customers till 30th December 2016. Cash withdrawals from ATMs will be restricted to INR 2000 per day per card up to 18th November 2016, Thereafter, the limits will be raised to INR 4000 per day per card.
- After 30th December, 2016, these old banknotes can be exchanged from the RBI offices till 31st March, 2017.
However, petrol pumps, CNG stations, government hospitals, train and airline booking stations, state-government recognised dairies, ration shops, and crematoriums are allowed to accept the 500 and 1000 rupee notes till 14th November, 2016.
POSSIBLE EFFECTS OF THE SCHEME ARE DISCUSSED HEREUNDER:
- This decision is supposed to have a favourable impact on the Indian economy as the major drive behind the step is to the wipe-out the hoarding of black money.
- The Scheme is introduced by the GOI with the object to curb the financing of terrorism through the fake Indian Currency notes of higher denomination.
- With this step, the Bank Deposits are expected to increase, thereby increasing their lending capacity.
- This will majorly affect and hamper the unorganised sectors prevalent in the Indian economy. The economy is likely to face heavy deflation in near future. Inflation will slowly and gradually balance out the deflation, since the lending activities do not happen overnight.
- It is a great step towards cashless economy.
PRACTICAL DIFFICULTIES LIKELY TO BE FACED:
- This step will hamper medical care for next few days because of unavailability of sufficient quantum of new Currency and the old banknotes can be used in Government Hospitals only.
- Tourists might have to suffer in the next few days due to this situation in the Country.
- It will have a general impact on daily activities and needs of a common person because of non-availability of the new currency for few days.
However, all these difficulties are expected to be faced for few days only, and is not a heavy cost to bear in order to move a step forward to eradicate black money and terrorism.