The reason for demonetisation-In a growing economy like India there is a lot of money but the main problem is that it is not accounted for.In recent times there has been a lot of money that has been hoarded as black money and that is what is crippling the economy.So, to counteract the following demonetization was the last resort.
The reason for demonetising bigger currencies-In this the main point would be that larger currencies are easier to accumulate and there by hide huge amounts.The black money hoarded is in the form of larger currencies and hence putting an end to them would surface all the hoarded money
Why do the demonetisation without prior notice-The main point of the demonetisation is to catch people hoarding off guard.There was a limit on exchange also this was to avoid the hoarders from getting rid of the excess money.Many people who gradually try cleanse their black money were as penalised as some of the disproportionate money would be accounted.
The short term problems of demonetisation-There were a lot of problems like common people standing in huge line to get currency and lot of cash crunch.The people belonging to the lower strata who did not have access to the ATMs and Banks suffered a lot.
Other countries who followed the same strategy-India is not the first country to follow the demonetisation strategy,There have been a lot of countries who have done this like Nigeria ,Congo ,Myanmar etc
The decrease in Real estate market due to cash crunch.In many transactions there is a speculated amount of black money that is used in transactions.The demonetisation has slowed down the process to a great extent.In the current trend whoever is buying or selling has to pay proper stamp duty on the amount.This will also supplement the government's income to a great extent.
Increase in Cashless Alternatives-There have been a lot of alternatives like paytm and also the use of meal pass to name a few
The government APP-There have been a couple of payment interfaces promoted by the government for cashless transactions .One such App is BHIM for cashless transactions
Black money hoarding reduced-This has forced many who hoarded black money to declare assets and pay the penalties.This can boost the revenue of the government
The burden on Banks for the past couple of months-There has been a heavy burden in all of the banks to work through weekends to server the customers.The Bank staff have put in their best efforts to bring things back to normal
ATM problems-There has been a lot of problems in fetching the money from ATMs.Nowadays ATM have become one of the easiest ways of withdrawing the money.Due to shortage in cash most of the ATMs had problems being replenished
The most affected-There are still a large amount of people around that do not use the ATMs and depend primarily on cash for their daily wages .These people had a lot of problems standing in long queues in banks
The government as the time progressed by started giving concessions to various parties to withdraw a higher amount of money like the people who had to conduct marriages.There have also been concessions for people holding current accounts.
currencies-The notes that got demonetised were of denominations 500 and 1000.
The notes that were demonetised were asked to be deposited
The new notes were first given as 2000 notes and this led to a lot of problems in obtaining change as the circulation of 100 and 50 were not pre emptively increased.
After a couple of days there were 500 rupee notes that were circulated.
The new 500 rupees notes reduced the strain on 50 and 100 Rupee notes
The long term advantages of Demonetisation would be reap we patiently wait for the next financial year