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Advantages and Disadvantages of Demonetizationy

On 8th of Nov, our honourable PM, Mr. Narendra Modi's announcement of the demonetization of Rs.500 and Rs.1000 notes created havoc among the common man. This piece of decision has even raised protests by the opposition parties. It has had a tremendous amount of hustle and bustle in the banks, longer and longer queues outside the ATMs and post offices. To put a dead end to the flow of black money and terrorist financing, demonetization has been taken as a major step. It has affected the day to day lives of men, economic status of the nation alongside having more number of advantages.

Such a massive and sudden decision made by the government has its own pros and cons.


Decline in black money

This will help in digging out the black money out of the corrupt officers and industrialists. For these people, their black money in hard cash is now a pile of trash.

End to fake currencies

There will be a decline in the production of fake currencies as old denominations of Rs. 500 and Rs. 1000 has been banned. The new currency will have new security features which will be hard to decode.

End to terrorism funding

Funding to the terrorist clans for weapons and artilleries which have been a long term concern will come to an end as they will not be able to use forged currency notes. This will prevent terrorist activities and protect our nation to some extent.

Cashless Nation

This step can move towards cashless nation as there will be less proportion of cash and people will tend to make payment through online payment sites which will help our nation to get more digitalised.

More transparency

As there will be online payment, a transparency will be set up in the nation to see through the transactions made by the people. This will be beneficial in tracking any kind of illegal transaction or payment.

Fair election

It is well known to us that how black money is used by political parties during elections. Demonetization will lead to a fair election without any use of black money.



Exchanging of notes, depositing them in the banks has created a hectic environment for the citizens. Long queues in front of ATMs and banks have been going on for quite a time. People have no option as they need money for their daily expenses.

Shortage of Money

As there is a huge population, shortage of money has also been a big trouble.


Initially, it might cause deflation as the corrupt men will not declare their black money as they might be accused by the Income Tax Department.

Difficulty in card transaction

Since everybody is not well versed with the card transaction, this might lead to inconvenience for them.

Difficulty to the RBI

In order to exchange all the 500 and 1000 notes, RBI might be charged of 12000 crore.

Economic effects

Till new currency notes don't get circulated, there will be a reduction in the money supply. Demands on gold and jewellery, consumer goods will be highly affected. This will affect GDP of the nation.

In spite of all the problems and inconvenience, people are ready to face this challenge for a better future. For a short term basis, demonetization will have a lot of disadvantage but on a long term basis, it will prove quite a boon for the nation if implemented properly. We all hope, this massive movement reduces corruption and creates a corruption free nation.

- Richa Padhi

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