On 8th November the Prime Minister of India, Narendra Modi, made an announcement that shook the whole world. But most tremors were obviously felt in India. PM Modi declared a total ban on currency notes of Rs 500 and Rs 1000. This brave step is called Demonetization.
With some exceptions, people are barred from making transactions via the two widely used denominations. Indian economy runs on cash and most purchases and payments are made through cash only. Thus making this decision must have involved a lot discussion on the consequences. Just like every other move, this one has its own pros and cons. Take a look at them and decide if the demonetization step is right or not.
- Most Indian households have huge sums of unaccounted money, which is a part of so called black money. One of the objectives of the government is to get this money out.
- Most significant businesses in India do not pay taxes. Be it lawyers, doctors, nursing homes, general stores, millions of these stack up cash after cheating tax authorities. Demonetization has shaken the tax cheats up.
- Government will get to know the Indian economy’s real position, where they stand and what other steps are needed to be taken. Now that GST has also arrived in the picture, it’ll be hard for people to avoid taxes.
- Distribution of new currency to everyone is not easy at all. The sudden ban on commonly used bills disturbs the economy. Supply chain of many products has been halted due to the ban.
- When millions or billions of rupees are taken out of the system, the ongoing projects or proceedings get adversely hit. Many shopkeepers, small traders and vendors have almost no buyers due to scarcity of cash.
All these cons are temporary. Even though people in India are facing many difficulties right now, over 80% of them have backed this decision. Probably because people are aware of the fruits that demonetization will bear in near future. It’s a real step against black money hoarders, terrorists and corrupt politicians — A step towards making India great again.