Demonetization is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.
In 2016, the Indian government decided to demonetize the 500- and 1000- rupee notes, the two biggest denomination notes. These notes accounted for 86% of the country’s cash supply.
- To curb black money
- To fight tax evasion
- To phase-out counterfeiting currency notes
- To nail down terrorism
- To move everyone to 'plastic economy'.
- To force the masses - a huge percentage of which has no access to banks, don't have accounts and deals only in cash - to shift to online transactions.
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