Demonetisation

The
Government of India claims that demonetization has been inplemented to stop the
counterfeiting of the currency notes, which is the source of funding for terrorism
across the borders by the neighboring countries. Usually nations demonetize
their local units of currency for different reasons such as combating
inflation, corruption and to discourage a dominant cash system (January 2017).  Demonetization in a way has forced the black
money holders to bring their cash into the banking system. The banking system itself
requires further tax information and the mechanism to curb fake currency.

·      
Unaccounted money was
often used for illegal purpose

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·      
The fake Indian currency
in higher denomination have increased

·      
In United Nation highest
note $100 and United Kingdom highest denomination is 50

·      
Terror Funding

·      
Real estate may see
significant course correction

·      
Political parties in
crisis ahead of polls

·      
Moving towards digital
payments

·      
Purchase of gold

Effect of Demonetization

Demonetization
had many disadvantages. The entire exercise caused disorder, chaos, and people
faced lot of problems to exchange the old currency and to get new currency.
Several deaths were reported while standing in queues for long time to exchange
their currency. BSE, and SENSEX lost nearly 1689 points, while NIFTY lost by
over 541 points soon after the announcement of demonetization. A sudden hike in
the online transactions with usage of debit and credit cards was also reported.
The effect of demonetization depends on government policies. The effect will
turn to negative when the government chooses to increase the salaries of
organized sector and government employees with extra revenue   generated
through demonetization process. It will be a problem of survival for the
unorganized sectors.

Digital economy

The
digital payment sector across the global economy is one of the most dynamic sectors.
The term digitalization was started with the e-commerce start-ups. These
e-tailers helped to begin the process of weaning customers into online channels
in the country. Digital transactions are becoming popular not only in India but
also in other countries as well. According to Google and The Boston Consulting
group report, digital payments are likely to be around US$500 billion by 2020,
which is 10 times higher than the current level. 

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