Jump to navigation Jump to search This article is about the 2016 decision to demonetise 500- and 1000-rupee banknotes. Queue at Bank to Exchange INR 500 and 1000 Notes – Salt Lake City – Kolkata 2016-11-10 02103. 1000 banknotes of the Mahatma Gandhi Series. The BSE SENSEX and Two percent daily forex review 50 stock indices fell over 6 percent on the day after the announcement.
In the days following the demonetisation, the country faced severe cash shortages with severe detrimental effects across the economy. Initially, the move received support from several bankers as well as from some international commentators. The move has also been criticised as poorly planned and unfair, and was met with protests, litigation, and strikes against the government in several places across India. Debates also took place concerning the move in both houses of parliament. 14,000 crore of the total demonetised currency had been discarded, leading analysts to state that the effort had failed to remove black money from the economy. The Indian government had demonetised bank notes on two prior occasions—once in 1946 and then in 1978—and in both cases, the goal was to combat tax evasion by “black money” held outside the formal economic system.
In 1946, the pre-independence government hoped demonetisation would penalise Indian businesses that were concealing the fortunes amassed supplying the Allies in World War II. In 2012, the Central Board of Direct Taxes had recommended against demonetisation, saying in a report that “demonetisation may not be a solution for tackling black money or shadow economy, which is largely held in the form of benami properties, bullion and jewellery. BJP spokesperson Meenakshi Lekhi had said in 2014 that members of the public who were often illiterate and had no access to banking facilities would be adversely affected by such a policy. 1000 banknotes was initiated between six and ten months before it was announced, and was kept confidential, with only ten people being completely aware of it.
2000 bank notes began in early May 2016. The Union cabinet was informed about the plan on 8 November 2016 in a meeting called by the Indian Prime Minister Narendra Modi. On 8 November 2016, Modi announced the demonetisation in an unscheduled live national televised address at 20:15 Indian Standard Time. However, only the top members of the government, security agencies and the central bank were aware of the move. 2,000 denomination well before the official announcement by RBI.