On 8th of November 2016, India experienced a drastic change as the Prime Minister, Mr. Narendra Modi scrapped of five hundred and thousand rupee notes under the name of demonetization.

Demonetization of the notes was an effort to stop the counterfeiting of banknotes, remove corruption and more people to move to non-cash options. It is money which has made the system corrupt. The system needs to be transparent.

Part of this demonetization is taking of higher valuation of Rs 500 and Rs 1,000 notes out of circulation. That was 86% of the money supply by value that had to cycle through the banks, either to be exchanged in limited numbers for the new Rs 500 and Rs 2,000 notes or to be deposited into banks.

People were eager to change their old notes and use new notes for their daily usages and for this, the reserve Bank of India (RBI) laid a detailed procedure for the exchange of notes. Government announced that citizens should tender their old notes until 30th of December. The people could exchange at any office of the RBI or any branch of a bank and credit the value into their respective bank accounts.

While the move to ban Rs 500 and Rs 1,000 denominations will hurt black money hoarders the most, it may cause inconvenience to the common man but only for a few days/months.

To control black money or unaccounted money circulation during demonetization period, Government taken various steps to control deposit or exchange old currency in banks. Later, introduced old currency exchange could be possible by filling up a form along with the ID proof. This move taken by Indian Govt had great implications.

As Indian citizens, we all should be proud of the fact that we elected a government which was capable of taking such a brave decision for a long-term betterment for the country’s economy.

Nevertheless, there’s high possibility for some people to think this step in a negative way due to the short-term challenges, but short-term constraints will be associated by long term benefits so the whole country must face the pain. There were many reactions to demonetization. It has its own pros and cons.

This initiative will have great implications in the future and India will have a cashless economy which is great for development of country. At present India using only 2% transaction as cash-less whereas Singapore has 61% cash-less transaction in volume.

While on the other side of the coin, it has affected many sectors, especially agriculture, real estate, retail market, transportation, etc who are dependent on daily and weekly pays. And there will be a security risk of the over usage of credit card to make online purchases.

The effect on lower and upper income classes would be more for few days or months until to get acquainted with e-payments, whereas internationally, the government positive response for the move and more countries could potentially see this as a viable option to curb black money and will try to invest in India that will boost Indian economy.

Friends, demonetization of the notes in India is really a great step to modernize Indian society and benefit the poor and improve Indian economy by way to stop counterfeiting notes, remove corruption, curb black money and move to non-cash options by using credit card or debit card or e-wallet.

“Change comes with pain……….But this pain later becomes gain”!