In Nov 2016 Indian government decided to demonetize its economy. Banknotes of 500 and 1,000 were declared worthless and people were given time until the end of the year to exchange these notes with new 2,000 rupee notes and 500 rupee bills. The step was taken in order to combat inflation, corruption; to discourage cash-dependent economy and to facilitate trade. Although, people faced really bad consequences as Indian economy is highly cash-dependent country. The economy experienced sparked weeks of economic disruption, crowded lines at banks and even deaths. The major reasons behind demonetization in India were:
- To deal with illegal activity. The government proposed these amendments in order to dig out the hidden money earned through illegal ways which are probably the black money.
- Demonetization also aimed to cope up with tax evasion and to create hurdles in the ways of people who earn money through criminal activities.
- To keep a track as well as to stop the exchange of fake money.
- The act of demonetization could also help to hunt the money supply to terrorist groups and money helping such activities.
- The government wanted to develop a system of electronic money transaction.