Demonetization Advantages and Disadvantages

Demonetization refers to discontinuing of current currency units and replacing those currency units with new currency units. It is a major decision and it impacts all the citizens of the country because overnight all the money you have become a piece of paper which has no value if you do not exchange it with new currency units or deposit it in the banks. In order to understand demonetization better let’s look at advantages and disadvantages of demonetization –

Advantages of Demonetization

  1. The biggest advantage of demonetization is that it helps the government to track people who are having large sums of unaccounted cash or cash on which no income tax has been paid because many people who earn black money keep that money as cash in their houses or in some secret place which is very difficult to find and when demonetization happens all that cash is of no value and such people have two options one is to deposit the money in bank accounts and pay taxes on such amount and second option is to let the value of that cash reduced to zero.
  2. Since black money is used for illegal activities like terrorism funding, gambling, money laundering and also inflating the price of major assets classes like real estate, gold and due to demonetization all such activities will get reduced for some time and also it will take years for people to generate that amount of black money again and hence in a way it helps in putting an end this circle of people doing illegal activities to earn black money and using that black money to do more illegal activities.
  3. Another benefit is that due to people disclosing their income by depositing money in their bank accounts government gets a good amount of tax revenue which can be used by the government towards the betterment of society by providing good infrastructure, hospitals, educational institutions, roads and many facilities for poor and needy sections of society.

Disadvantages of Demonetization

  1. The biggest disadvantage of demonetization is that once people in the country gets to know about it than initially for few days there is chaos and frenzy among public as everybody wants to get rid of demonetized notes which in turn sometimes can lead to law and order problem and chaotic situation especially in banks and ATMs which are the only medium to change the old currency units to new currency units.
  2. Another disadvantage is that destruction of old currency units and printing of new currency new units involve costs which has to be borne by the government and if the costs are higher than benefits then there is no use of demonetization.
  3. Another problem is that majority of times this move is targeted towards black money but if people have not kept cash as their black money and rotated or used that money in other asset classes like real estate, gold and so on then there is no guarantee that demonetization will help in catching corrupt people.

As one can see from the above that demonetization has both advantages and disadvantages and it is up to the government to see and analyze all the pros and cons and then decide whether it is beneficial to go ahead with demonetization or not.

26 comments… add one

  • Tanya Chaudhary

    a Very GOOD step to curb the black money and black money holders.

  • Sabita kumari

    it is a verry good step to devolopment of india

  • mukesh kumar panchal

    anyhow in our country india..there are strong chances for the betterment of the economy… ok…we all know only the mighty and super-duper-extraordinary rich people can escape the so called trap which is thrown upto the dishonest people of india by the indian govt…

  • krishna

    VERY FANTASTIC DECISION OF MODIJI ,THIS WILL END OR REDUCE TERRORISM

  • kiran bhardwaj

    support modi he is the man who brought revolution in economy & development.

  • P.L.Liandinga

    This is a great move for the government to uplift the fiscal situation.

  • Reena

    Very good move by our prime minister but plz do fix up the cash change problem at rural areas so that no Arvind krijival nor Rahul Gandhi can create unnecessary problems.

  • Satwik

    Great step by Mr. Modi

  • Ajaykumarparakkat

    No doubt that it’s a great move to control black money and I would congratulate our PM for his courage. Unfortunately, due to lack of availability of new currency people are facing lot of problems, for which the government should find immediate solution.

  • A K Shahi

    Well done Our P.M… Only you can take such bold step..

  • Akhilesh Chaurasia

    wel done our PM MOdijii

  • Sharveen

    Yes its a great move….. i am not sure about the black money and its holders, but black activities like terrorism,Gambling,corruption etc will be substantially get reduced. this step will be effective only when further all the transactions are made legally and proper systems are implemented to control it. otherwise its just another wrong decision and may encourage the corruption as those who lost the huge corrupted money due to demonetization may restart to collect the new notes in the name of corruption.

  • Deepthi

    I support our PM for his grt step for the betterment of the society i am 100% sure that we can proudly say India is a devoloped country

  • Sanyam Saxena

    It s a great step but my friend every benefit comes with a challenge!If you want to encash this benefit then bear some problems.The result is good, I guarantee you.

  • It is very big step for develop our country by p.m modi gi

  • gayathri.n

    i really like the idea of demonitization,but it has led to the suffering of poor people and lot of business and agricultural disasters..is there any solution for that? even though we say demonitizationit is good for future, what is the use if we don’t curb the present problems?

  • Sayantan

    Brilliant and Brave Decision. Long time India didn’t see a true PM…. I Support Modi ji…

  • Gowsepeer

    Ok i agree good step then what about unaccountability transactions right from door step of house like chits,gas delivery boy tips, hotel boy tips,finances, non monitaring ticket issuing chambers, real estate business lenders buyers, gold purchases, immovables properties, assests, private businesses , traffic police unauthorised collections, train tte collections, agents, hawkers, middle man ship, brokers etc etc first of all i request curb illegal and unauthorised unaccountability things right from ground level please think and calculate their incomes which has no account only sufferers are employees and common man without side income, farmers and daily wage coolies.

  • Preeti

    It was best step taken by pm and he is first prime minister who had guds to take this step or else congress govt the faluires couldnt have much guts to think about it I support modi and also give advice to support him

  • jake

    So now I understand why our modiji will take action on people having so much properties.This is going to be a big change.Thanks modiji.

  • sanat kumat

    Itis good step taken by Narendra Modi

  • Arun

    It is a great step but providing new currency in the rural area little bit low needs to be increased by the govt

  • raj

    it’s too great step. but i m mango man n want result in future.

  • Tanvi

    very good step by our prime minister……..I support my PM

  • Gayatri Lanka

    it is a very good step

  • Arush

    Very good step towards betterment of the society

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