Around 8:00 PM, PM Modi started his address to nation and by 8:20 PM it was clear that he has taken a bold and reformative step to clean up India's black economy.
The earlier Demonetization was done in 1978 by Moraraji Desai government and notes to 1000/5000/10000 were declared "no-more-a-legal-tender".
It's close to four decades and size of India's economy has grown leap an bound to around 2.25 Trillion $s.
In terms of value, the annual report of Reserve Bank of India (RBI) of 31 March 2016 stated that total bank notes in circulation valued to ₹16.42 lakh crore (US$240 billion) of which nearly 86% (around ₹14.18 lakh crore (US$210 billion)) was ₹500 and ₹1000 banknotes. (Source: https://en.m.wikipedia.org/wiki/Indian_500_and_1000_rupee_note_demonetisation).
With announcement of demonetization 86% of currency has turned into mere paper and will be replenished back with new currency of 2000 and newly designed 500 rs.
This replenishment, will be done till 30th December and citizens have to go to bank to deposit or exchange their old currency.
Demonetization is done to weed out black money accumulated over the period, which is static or is circulating in unaccounted economy.
As per some studies the black economy is 20 to 25% of formal economy, which by any means is huge, quarter or one-fifth of economy being black is equivalent to loosing a leg or hand consciously.
Since decades we have been hearing lot of rants and grunts against eradication of menace, but high talks used to melt away in thin air. With each passing decade more billions get added to it.
Many government lost power in center and states due to corruption and black money.
Strangely the government used to come with promise of removing black money, become flag bearer of it and nurture it profusely.
PM Modi took decisive action and showed exemplary courage to walk the talk.
He respected the mandate given to him and sledgehammered cynicism.
16 November 2016
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