Impact of Demonetization on India

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Extempore Topic: Impact of Demonetization on India

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Below is the solved Extempore speech topic. Going through it will enable you to get an idea how and what you should speak with a balanced approach.

 

Solved topic

Demonetization was sudden and came as a surprise on the night of November 8, 2016 when the Prime Minister of India, Narendra Modi announced the demonetization of all Rs.500 and Rs. 1,000 denomination banknotes of the Mahatma Gandhi Series.

 

The demonetization announcement made the use of Rs.500 and Rs.1000 banknotes invalid past midnight of November 8. The objective of demonetization as claimed by Government of India was to curtail the black money running as shadow economy and to stop the use of counterfeit cash to fund illegal activity and terrorism. The sudden nature of the announcement—and the prolonged cash shortages in the weeks that followed—created significant disruption throughout the Indian economy, threatening economic output. 

 

The move was heavily criticized as poorly planned and unfair, and was met with protests, litigation, and strikes. In the days following the demonetisation, the country faced severe cash shortages with severe detrimental effects across the economy. People seeking to exchange their bank notes had to stand in lengthy queues, and several deaths were linked to the inconveniences caused due to the rush to exchange cash. As the cash shortages grew in the weeks following the move, the demonetization was heavily criticised by prominent economists and by world media.

 

If we analyse the key objectives of Demonetization, it has remained a success and has been termed as the greatest financial reform that aims to curb the black money, corruption and counterfeit currency notes. All the people who are not involved in malpractices welcomed the demonetization as the right move.

  • Demonetization has helped India to become corruption-free to a large extent as it became difficult now to keep the unaccounted cash.
  • Demonetization has helped the government to track the black money as the unaccounted cash will now flow no more and the amount collected by means of tax can be better utilized for the public welfare and development schemes.
  • One of the biggest achievements of demonetization has been seen in the drastic curb of terrorist activities as it has stopped the funding the terrorism which used to get a boost due to inflow of unaccounted cash and fake currency in large volume. 
  • Money laundering has become difficult as the activity can easily be tracked and the money can be seized by the authorities.
  • Demonetization has helped in stopping the running of parallel economy due to circulation of fake currency.
  • Banks which were reeling under deposit crunch and were running short of funds have suddenly swelled with lot of money which can be used for future finances and loans.
  • The people who opened the Jan Dhan accounts can now use their accounts and become familiar with banking activitiy. The money deposited in these accounts can be used for the developmental activity of the country.
  • Demonetization has driven the country towards a cashless society. Lakhs of the people even in remote rural areas have started resorting to use the cashless transactions. The move has promoted banking activities. Now even the small transactions have started going through banking channels and the small savings have turned into a huge national asset.
  • Inflationary trends have slowed down

Steps needed to wipe out the Adverse Impacts

  • Economic activities have slowed down and it is feared that it will take time for GDP to take a good growth. It requires to be given a boost.
  • India is an agriculture based economy and due to the cash crunch, the farmers especially small and marginal who largely depend on cash to buy seeds, fertilizers and to pay for sowing, borrowing water for irrigation and for other related agriculture equipments need support from the banks and the government.
  • Real Estate sector needs a boost to put it back on track to safeguard the interests of the home-buyers, builders and the employed work force. Due to the cash crunch more builders have preferred going to jail instead of facing the wrath of buyers as the delivery of the unconstructed units is pending in large number.

However, Initiatives such as interest waivers on home loans, the government’s push for affordable housing through Pradhan Mantri Awas Yojana (PMAY) and the ‘Housing for all by 2022’ mission have come to the forefront over the past one year. Various policy initiatives, amendments and reforms aim at making the real estate sector more transparent, organised and fundamentally stronger.

 

Indian Economy is showing a higher GDP growth than many other countries in the world. Accordingly, on the one hand demonetization has brought more stability with transparency in Indian economy, on the other hand it has been instrumental in checking various malpractices and terrorist activities, money laundering, hawala transactions among others.  

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