Why was demonetisation required?
there are several theories on why demonetisation was announced. When Narendra Modi was sworn in as Prime Minister, he had pledged to bring back black money, stashed overseas by several Indians. he had also promised to take a harder stance against terrorism. When he made the declaration, Modi reiterated these points. He mentioned that the sudden move was deliberate, so that people would not have time to change unaccounted money. Any one attempting to change notes must disclose their identity. Also their wealth must match their source of income. Any mismatches at this stage would result in investigations. Modi went to say that since these notes are now useless, border infiltration will decrease as terrorists will not have enough money to conduct activities.
But experts have other ideas. They believe this strategy is a stepping stone for Modi to secure a foothold in Uttar Pradesh, which will hold elections next year. The belief is that with the cash crunch that has gripped the nation, political parties (which collect illicit cash), will find it difficult to fund their campaigns next year. For Modi, wining the UP elections is crucial as it is the largest state and his party has a minority there.
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How has it affected people?
For the most part, demonetisation caused inconvenience to people with the old notes as they had to queue outside banks to get their notes changed. The limit on the maximum amount that can be withdrawn, added to the problems. Besides this, many businesses that relied on cash, were severely affected. Traders, grocers and fishermen lost out on sales as customers did not have legitimate notes. Many small businesses do not use credit/debit card systems and they suffered the most. Other sectors like real estate, dining and fashion faced setbacks. Labourers skipped work fearing they might not be paid their daily wages. A few companies laid off employees as well.
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