DEMONETIZATION AND IT'S HISTORY IN INDIA

INTRODUCTION-
Demonetization of a currency simply means that when a value of coin or paper
currency loses its legal existence or legal tender status in a country or in an
economy.
In other words, it simply means withdrawing few currency notes or coins from
economy to replace them with a new currency notes or coins.
As Indian economy is a vulnerable system to the impact of illegal activities like
black money, corruption & financial crimes, etc. Also, the incidence of false
banknotes in the country has increased and due to similarity of these fake notes
with original ones, gives birth to many illegal activities like terror funding,
smuggling, and drug trafficking, and also acts as source of corruption.
To reduce the risk faced by society in the face of informal economy, it is
necessary to eradicate black money and remove counterfeit currency in the
economy. So, on a fine morning i.e. 8th November 2016 the Narendra Modi
Government had announced the demonetization of Rs.5,00 and Rs. 1,000 bank
notes in India and introduced the new notes of Rs .5,00 and Rs.2,000 in the
economy, and removes Rs.1,000 banknotes from the economy. In this sense, it
was a strategy to eradicate black money, minimize corruption, terror funding,
smuggling, and drug trafficking and to make the non tax compliant society into tax
compliant society, and a formal economy.

HISTORY OF DEMONETIZATION IN INDIA
The demonetization was announced two times in the past i.e. in 1946 and 1978.In 1946, currency notes of Rs.1000 & Rs.10,000 were removed from the country as the currency was of such higher denomination. But these notes were
reintroduced in 1954 with an additional introduction of Rs.5000 notes.
In 1978, the Prime Minster Morarji Desai announced the demonetization of
Rs.1000, Rs.5,000 and Rs.10,000 in the country. The aim of demonetization was to
curb the black money in the economy.