What are the demerits of demonetisation?
What are the demerits of demonetisation?
The biggest disadvantage of demonetisation has been the chaos and frenzy it created among common people initially. Everyone was rushing to get rid of demonetised notes while inadequate supply of new notes affected the day to day budgets of citizens.
What is the merits and demerits of demonetisation?
A Comparison Table for Advantages and Disadvantages of Demonetisation
| Advantages | Disadvantages |
|---|---|
| Demonetisation can result in a decrease in tax evasion by individuals and ensure the implementation of practical public measures. | Every ATM in the country needs to be remodified to allow the exchange of currency. |
What are the reasons of demonetisation?
Reasons for Demonetization Demonetization can also be used to prevent criminal actions, such as counterfeiting, terrorism, or tax evasion. In other cases, demonetization occurs to implement a new currency standard.
What are the consequences of demonetisation in India?
According to the RBI data, almost the entire chunk of money (more than 99 per cent) that was invalidated came to the banking system. Of the Rs 15.41 lakh crore worth invalidated notes, notes worth Rs 15.31 lakh crore have returned.
What are the demerits of RBI?
Demerits:
- Under this system, a large amount of precious metal lies locked in the reserve and cannot be put to productive use.
- It is easy to expand or increase the currency but very difficult to reduce it.
- In practice, high denomination notes are converted into low denomination notes and not into coins.
What happened on demonetisation?
On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes.