On 8 November 2016 Prime Minister Mr. Narender Modi declared discontinuation of 500/- and 1000/- rupees note as no more legal tender from 9 Nov 2016.
It was a courageous attempt to fast resolve the long pending issues which produced boisterous results at that time.
The sequence of happenings led to the compulsion of epoch-making decision need to elaborate.
During 2004-09 duplicate currency printing of 500 and 1000 rupees note with the same series particularly by Pakistan which was funding to terrorism and Maoists activities was known factor. The pouring of counterfeit currencies was reported by FBI to than UPA-2nd government in 2011.
The then finance minister P. Chidambaram took note and put expiry date for Rs 500/- printed before 2005 and appealed for its return to banks in 2014 but no deadline was given so wasn’t cared and attracted a lukewarm response.
Global cryptocurrency, pumping of fake currency by Pakistan, terror money and black money were needed to be dealt with iron hands.
The economy was also in need to cure the prevailing recession due to increasing MPS which wasn’t equal to investment. The gap was resulting in increasing hoarding of cash with public and poor demand deposit with banks. The unused money was lowering to MPC and multiplier.
It was urgently required to bring the unused money about billions of rupees out in the open and increase banks’ liquidity for improving circulation and propel real estate, roadways, railways, energy, arms production etc and energies industrial sectors for boosting employment. it was also required to tackle falling GDP, reducing transactions and rising unemployment.
The wonderful revenue was passed on to BPL through Jandhan accounts. Stone pelting in Kashmir got set back with the blockage of funding.
It hit Maoists whose huge stashed money turned into a bundle of papers.
High-security features in new currency made counterfeiting almost impossible but 2000/- rupees notes are easier to stash easily which needs to cure on priority.
Demonetisation was followed by compulsion of Aadhar number which exposed lakhs of ghost employees who were getting salaries, also controlled misuse of funds meant for poor through MNREGA and other schemes.
Our country is now rapidly moving towards a cashless economy which is a good way to get rid of black money and made accountable business houses and broaden the base of taxpayers which will certainly reduce the tax burden of an honest middle class.
Such decision was the need of time and rightly said that national interest is above party politics.