Demonetization- A PATH FOR CASHLESS ECONOMY IN INDIA
4 likes328 views
The Indian rupee is the official currency of India, managed by the Reserve Bank of India. It is divided into 100 paise. The rupee symbol was officially adopted in 2010 and features elements of the Devanagari letter "Ra" and the Latin letter "R". India has a history of demonetizing high-value banknotes to combat issues like inflation, corruption, and a cash-dependent economy. In 2016, Rs 500 and Rs 1000 banknotes were demonetized as they accounted for 86% of currency in circulation by value. This move was aimed at reducing the cash economy and encouraging digital and cashless transactions using methods like mobile wallets, debit cards, and online transfers.
Demonetization- A PATH FOR CASHLESS ECONOMY IN INDIA
- 2. Currency is a generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services. Currency is the basis for trade.
- 3. TheIndian rupee(INR) is the officialcurrencyof theRepublic of India. The rupee is subdivided into 100 paise(singularpaisa). The Reserve Bank of India manages currency in India under the Reserve Bank of India Act, 1934.
- 4. The rupee is named after the silver coin,rupiya, first issued bySultanSher Shah Suriin the 16th century and later continued by theMughal Empire.
- 7. In 15th July 2010, anew symbolfor Indian rupee was officially adopted. It was derived from the combination of theDevanagariconsonant (ra) and theLatincapital letter R without its vertical bar (similar to theR rotunda). The parallel lines at the top (with white space between them) are said to make a reference to the tricolourIndian flag,and also depict an equality sign that symbolizes the nations desire to reduce economic disparity. The first series of coins with the new rupee symbol started in circulation on 8 July 2011.
- 9. Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency.
- 10. The current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins. Sometimes, a country completely replaces the old currency with new currency. The opposite of demonetization is remonetization, in which a form of payment is restored as legal tender.
- 12. The sudden move to demonetize Rs 500 and Rs. 1,000 currency notes is not new.
- 13. Rs 1,000 and higher denomination notes were first demonetized in January 1946 and again in January 1978. The highest denomination note ever printed by the Reserve Bank of India was the Rs 10,000 note in 1938 but these notes were demonetized in January 1946.
- 15. Rs 500 note came into circulation in October 1987. The Rs 1,000 note made a comeback in November 2000. The move was then justified as an attempt to contain the volume of banknotes in circulation due to inflation.
- 16. There are multiple reasons why nations demonetize their local units of currency: to combat inflation To combat corruption and crime (counterfeiting, tax evasion) to discourage a cash-dependent economy to facilitate trade
- 18. On 28 October 2016 the total banknotes in circulation in India wasRs.17.77 trillion(US$260billion). In terms of value, the annual report of Reserve Bank of India (RBI) of 31 March 2016 stated that total bank notes in circulation valued to Rs16.42 trillion(US$240billion) of which nearly 86% (around Rs 14.18 trillion(US$210billion)) were Rs 500 and Rs.1,000 banknotes. In terms of volume, the report stated that 24% (around 22.03 billion) of the total 90266million banknotes were in circulation.
- 22. A cashless society describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins, but rather through the transfer of digital information (usually an electronic representation of money) between the transacting parties.
- 26. Cheque Demand Draft Online Transfer- NEFT or RTGS Credit Card or Debit Card E-Wallets (PayPal) Mobile Wallets (Paytm) UPI apps (Bank) Gift Card Aadhaar Enabled Payment System Unstructured Supplementary Service Data
- 28. Convenience Discounts Tracking spends Budget discipline Lower risk (Stolen) Small gains (Reward Points) GO DIGITAL, GET DISCOUNTS
- 29. Service tax: Waiver of service tax of 15% on digital transactions up to `2,000. Fuel: 0.75% discount on digital purchase of fuel through credit/debit cards, e-wallets or mobile wallets. Rail tickets: 0.5% discount on monthly and seasonal suburban railway tickets from 1 January 2017. Online rail ticket buyers get up to `10 lakh free accident insurance too.
- 30. Rail catering: 5% discount on digital payments for railway catering, accommodation, retiring rooms, etc. Highway toll: 10% discount on NH toll payment via RFID or fast-tags in 2016-17. Insurance: 10% discount by government general insurers on premium paid online via their portals. 8% discount on new LIC policies bought online via its site. POS: Rs 100 a month is the maximum rent that PSU banks can charge for PoS terminals. Rupay: Kisan credit card holders to get RuPay Kisan cards.
- 31. Higher risk of identity theft Losing phone Difficult for tech-unsavvy Overspending
Editor's Notes
- #9: https://www.nrilegalservices.com/wp-content/uploads/2016/12/DEMONETISATION_02.jpg
- #22: https://www.focus-economics.com/sites/default/files/wysiwyg_images/india_economy_panelistblog.png
- #28: https://indianmoney.com/images/article-images/how-the-war-on-black-money-made-india-a-cashless-economy.jpg