Demonetisation: Impact on India's Economy

“The Currency Notes in themselves are nothing but paper”. The above quote can be proven and inferred from the notice issued by Government of India on November 8, 2016 making notes of 500 & 1000 of Indian Currency Useless. November 8, 2016, One of the most important day for the dramatical change in Indian Economy. Hon'ble Prime Minister of India, Shri Narendra Damodar Das Modi, announced that the Rs 500 and Rs. 1000 denominated currency notes will cease to be legal tender from the midnight of 8th of November 2016. People have been given upto December 30, 2016 to exchange the notes held by them. The reasons offered for demonetisation are two-fold: one, to control counterfeit notes that could be contributing to terrorism, in other words a national security concern and second, to undermine or eliminate the “black economy”. As per arguments poised by Government of India, they have issue the said order under the power vested in Section 26(2) of RBI Act of 1934. Hence according to the said proviso the act, central Government of India can remove “any series of bank notes at any time” but it has removed two of the highest denominations in one go making all notes of 500 & 1000 useless. One individual can open his or her account at zero balance in any bank. According to report issued by Pradhan Mantri Jan Dhan Yojna on 09.11.2016, 255116805 account were opened under the scheme.