It has been nearly seven months that PM Narendra Modi announced the demonetization of all the old Rs 500 and Rs 1000 notes last year in December. Around 86% of the total currency in the economy was deemed unusable and was later pumped back by the addition of new Rs 2000 and new Rs 500 notes.
However, things might get a little easier in the time to come as the Reserve Bank of India has announced that the printing of new Rs 200 notes has already begun. These new notes are being printed in government owned facilities and are expected to smoothen consumer transactions.
A major economist at RBI pointed out that the introduction of new Rs 200 notes would add to the ease of operations as far as day-to-day transaction purposes are concerned.
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Demonetization was aimed at zeroing into all the black money that was freely flowing in the Indian economy. Many experts claimed it to be a great move and many others deemed it as a bad implementation of an otherwise good idea. After demonetization, there was chaos in the entire country due to a shortage of cash in the market. The introduction of the two new denominations did help in bringing things to a still. However, there was a visible flaw in the decision making of the government.
Many economists claimed that an economy couldn't sustain a Rs 2000 note without a Rs 1000 note as people will simply not have enough change for the bigger denomination, and indeed was the case until the Rs 500 notes were introduced a few weeks later. Now, with the addition of new Rs 200 notes in the market, the people of India are going to breathe new life because of the simple reason that smaller denominations make everyday transactions viable and convenient.
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In effect, this whole process is going to complete the entire process of demonetization in terms of replacing old currency with newer ones. However, the real success of demonetization will actually depend on how much unaccounted money has been able to get injected into the economy through the deposits of the old Rs 500 and Rs 1000 notes. As for the general public, this is a time to rejoice; but for the government, there is still a long way to go before they can declare demonetization as successful.
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