Demonetisation

Demonetisation means to withdraw existing currency from use.

Example

In November 2016, the Government of India demonetised existing currency notes of Rs500 and Rs1000.

These were no longer legal tender i.e no longer a medium of exchange

New currency notes in the denomination of Rs500 and Rs2000 were introduced.

Public was adviced to deposit all old currency notes in their bank accounts till 31st December 2016.

Objectives of Demonetisation

1. The main objective was to curb black money.

2. To reduce tax evasion

3. To bring back black money into the banking system'

4. To stop circulation of fake currency

5. To curb terrorism

6. To Tackle problem of corruption

Effect on Public

The move received both criticism and appreciation

People had to stand in long queues outside ATMs and Banks for cash deposit and withdrawal

The shortage of currency adversely affected the economic growth of the country.

NCERT Questions

No questions in this part

Other Books

Question 1

In the following questions, select the correct answers:

Which of the following is true regarding Demonetisation?

a. The move took place in November 2020

b. Demonetisation's main motive was to curb black money

c. New currency in the denomination of Rs1000 and Rs2000 were introduced

d Existing currency notes of Rs500 and Rs1000 were demonetised.

Oswaal Questions

Question 1

Read the below case and answer the questions that follow:

In a 40-minute long speech Prime Minister Narendra Modi announced the demonetisation of existing notes of Rs 500 and Rs 1,000 during a televised address on Tuesday evening.

Modi announced that the notes of Rs 500 and Rs 1,000 "will not be legal tender from midnight tonight" and these will be "just worthless pieces of paper".

PM also urged people to 'join this mahayojna against the ills of corruption. - "What is demonetisation and why was it done?" - The Economic Times, Nov 09, 2016

Question 1(i)

Under whose purview does the issue of new currency fall in?

a. Reserve Bank of India

b. Central Government of India

c. State Government

d. All of the above

Question 1(ii)

Which two currency denominations were demonetised?

a. Rs 100 and Rs 500

b. Rs 500 and Rs 2,000

c. Rs 1,000 and Rs 2,000

d. Rs 500 and Rs 1,000

Question 1(iii)

______________ is issued by the government of India.

a. Coins

b. Rs500 note

c. Rs1000 note

d. All of these

Question 1(iv)

Rs1 currency note is issued by ______________.

a. Finance Ministry

b. RBI

c. NITI Aayog

d. None of the above