On Tuesday at 8 PM, Prime Minister Narendra Modi announced that the high currency notes will not be considered a legal tender with effect from midnight. With this demonetization move, the Rs 500 and 1000 currency notes have became obsolete. They are just worthless piece of paper now. This bold move is taken by Narendra Modi to free the nation from the black money which is stashed in the safes and lockers of the corrupt people. This will flush all the black money and will break the grip of corruption and will help in developing the nation.
While most of the citizens are applauding the move despite the inconvenience they have to experience in exchanging the notes, there are many politicians who are slamming this decision. The demonetization step hasn’t gone well with the Delhi CM Arvind Kejriwal, Mr. Kejriwal has been continuously slamming PM Narendra Modi for banning the use of Rs 500 and Rs 1000s notes overnight. He even accused the NDA government of informing its party members and associates “A week before” the demonetization move was implemented.
There are many politicians who are questioning the intentions of the government in stopping the corruption and dealing with black money. Everyone is asking the government to explain the logic behind banning Rs 1000 notes and introducing Rs 2000 notes.
86% of currency by value in India are of Rs 500 and Rs 1,000 denominations.
According to the RBI database, Rs 17,54,000 crore worth of notes are in circulation in the Indian economy. In this Rs 500 notes constituted almost 45% of the currency in circulation, and Rs. 1000 notes constituted around 39% of the total notes in value terms. But in volume, Rs 10 and Rs 100 notes constituted a total of 53% of the notes in circulation.
Almost Rs 6,32,600 crore in circulation in the form of Rs 1,000 notes became an illegal tender after the demonetization move. The reason behind the demonetization of Rs. 500-1000 notes is that around 6.5 lakhs counterfeit notes were detected in commercial banks, out of which almost 4 lakhs were in the Rs 500 and Rs 1,000 category, and the remaining in Rs 100 category.
Liquidity problem is the main reason behind the introduction of Rs. 2000 notes. Demonetization of 500 and 1000 rupee notes will create a severe liquidity problem. As a result the small businesses will take a hit and the country’s growth will stall. The middle class people and the poor people will be the ones to suffer the most from this move. If liquidity problem is not handled properly the country can go bankrupt.
The most logical solution to this problem is Rs. 2000 notes. This will infuse liquidity, will provide high denomination in the economy in a short period of time.
Printing Rs. 2000 notes will take less time compared to Rs 500 or Rs 1000.
Rs. 2000 notes would make the transportation of a big amount easy. This would also make the refilling operations in ATMs very easy and less time consuming .
But why bring the new Rs. 500 note then?
With Rs 2000 introduction, there will be a change problem. The new Rs. 500 notes will address this problem.
Rs. 2000 notes will make the corruption easy, it would benefit the bribe givers and takers. Earlier those who carried 100 notes of Rs. 1,000 notes will now carry only 50 notes of 2,000 value. How to deal with it?
Narendra Modi is a very smart fellow. He has already planned everything. If he had not introduced Rs 2000 notes then our country could have gone bankrupt because of NO LIQUIDITY. Moreover Govt. must have plan to deal with demonetization of Rs 2000 notes. With this bait, he’ll catch even bigger fish next time. It’s a short term solution. With this move, people will adopt the digital banking tools. Businesses soon will have swiping machines.