Top Advantages And Disadvantages of Demonetization of 500 and 1000 Rupees in India

On the date of 8th November our respected Prime Minister took a drastic step against the circulation of fake currency, which is noted to be a decisive decision against black money and also illegal process of demonetizing notes of Rs. 500 and Rs. 100 which would be legal no longer. A clever step taken by government which can be linked to as surgical strike on circulation of black money by the government which included terrorist funding, smuggling activities, and many more fraudulent activities.

According to Reserve Bank Of India in the year 2015-16 around 7 lakhs counterfeit notes were detected in the commercial banks in which 4 to 5 lakhs were in Rs. 500 and Rs.1000.

There will be large fluctuation in the economy, resulting in heavy deflation. As those people who have earned a lot through the illegal activities such as smuggling, corruption now would fear the government and Income Tax department to disclose the black money. Apart from this the economy would also lead to inflation as there are many people who have earned a lot of money through legal activities. When this money will be deposited in the bank there will be fruitful circulation of money and the commercial banks would not have any problem in lending the money to the public in terms of loan.


Let’s take a look at some advantages and disadvantages:


#1. This step would help the government in fighting against many fraudulent activities. Such as fighting against black money, terrorist funding, smuggling, and fake currency which was the main motive of our Prime Minister. Though banning of 500, 1000 rupees note was not at all a easy decision.

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#2. Main motive for banning the notes was, giving a somehow stop to terrorist funding. As the money was circulated mostly in 500 and 1000 rupee notes, due to lack of funds and lack of circulation of money the terrorist funding would get cold for some time at least.

#3. As the money which was circulated for the fraudulent activities mostly in counterfeit currencies. This bold move will give a stop in financing the enemies of India and will help in fighting against counterfeit currencies/black money.

#4. The government announced that ATM withdrawal limit per day will be  2000 rupees only, whereas withdrawals from bank was limited to 10000 rupees a day and 20000 rupees within a week. This step was taken so that it would be easy to government to track the exchange of money as exchange could only be possible by giving a valid identity proof like Aadhaar card, PAN card, Election card etc.

#5. It became difficult for people to hide black money which were mainly in 500, 1000 rupees because banks were informed to share each and every necessary information with the Income Tax Department. So that there will be full fledge track of each individuals account with the Income Tax Department.

#6. This step would help in attracting the domestic investors by increasing the creditability of Indian Real Estate.

#7. Banning of the currency would lead to more and more deposits in the bank resulting in lending of more and more loans without any problem. Hence, interest rates on loans would be cheaper.

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#8. A fear would be created in the minds of people for future tax theft.

#9. A proper management in Fiscal Deficit by increase in Income Tax collection.


#1. The of 500, 1000 rupees note will show a huge loss in the business as the banning of currency would give stop to the collection of indirect tax.

#2. Common man will have to suffer a lot by running to their nearby banks for the exchange of money.

#3. Disbelief of foreign investors in Indian economy.

#4. Threat in the mind of tourists.

#5. A somewhat loss in the reputation of BJP especially in the minds of common public.

#6. It would surely create problem for half of the population as many of them are not card holders.

#7. This drastic decision would have a more impact on common public like maids, drivers, plumbers who depends upon monthly income or income in cash payments.

These were some of the advantages and disadvantages which proved to be good for some people and worst for some. If you have any suggestion in this topic please comment your opinion.


11 thoughts on “Top Advantages And Disadvantages of Demonetization of 500 and 1000 Rupees in India”

  1. Rahul says:

    For me demonetization sucks…

  2. Satyakam says:

    This is a bold step taken by our PM. It needs lots of courage to do so, and all parties should welcome this step.
    Major advantage in my view is Fake currency, Terrorist activities which include Pakistan sponsored and Naxalite.
    And final one is black money.
    I dont see any disadvantage when country comes first.

  3. Adarsh says:

    Yes, As Satyakam said Country comes first. For me it’s great decision taken by our PM and it’s working as well.

  4. Mohit says:

    best decision taken by Government…

  5. mithilesh says:

    I can’t say its bad or good but still waiting the effect .

  6. Rahul says:

    Good decision with improper management

  7. Kapil Kumar says:

    To take such kind of decision you must have 56″ Chest which Modi proves and several Indians are supporting him however the management of exchanging and withdrawl limits are not up to mark due to which people are facing few problems.

    I am support in support of this decision which is taken by PM Modi and surely it’s long term advantage will be seen in few months however you can still see in some news that interest rate of several banks are reduced so hope for the best and keep patience at least till 30th December and thanks for sharing this article keep up the good work all the very luck.

    1. Hina Khan says:

      Bhakt spotted, i know the decision is good but management sucks.

      1. Kapil Kumar says:

        As expected from some community they don’t read the complete views just speak I already said decision is good but management is really poor 🙂

  8. ck says:

    Govt. is taking initiatives and the decn is very prospective in long run. Everybody is started discussing of cashless transaction.

  9. Arun kumar says:

    I know this decision is good but managment strategy in not Good.

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