Demonetization of Rs 500 and Rs 1000 notes from Indian government is a bold move, but a mis calculated one! This move has caused major chaos in the market and also affected Rupee credibility in international market.
Indian rupee even if is a close ended and restricted currency, has major presence outside India, specifically in Nepal and Bhutan.
India's sudden demonetization has caused chaos in major markets across India, so lets find out what went wrong?
1] Banks were under supplied: All Indian banks including major banks were not supplied with new notes in advance. Supply of notes begin only after the announcement was made.Banks should have first being supplied with enough quantity of new notes so as to prevent any confusion or shortfall which happens. Also Banks were not properly having stocks of Rs 100 notes which should have been increase following this measure.
2] Indian Rupee is not exported: Since India does not export its Rupee, many people outside India suffered due to lack of Indian currency notes. Indian notes are accepted in Nepal and Bhutan, and also exchanged in major Middle eastern exchanges, India should have exported atleast some amount of money directly to these suppliers immediately after the announcement so as to prevent any chaos. Now they are dependent on visitors from India to get their new notes.
3]Inadequate limit : Indian government has limited its citizens to exchange currency upto Rs 2000 per head which is not adequate compare to the inflation.
Due to these reasons Indian Currency demonetization was a half hearten project which could have done with finesse if these majors would have been taken.
Indian rupee even if is a close ended and restricted currency, has major presence outside India, specifically in Nepal and Bhutan.
India's sudden demonetization has caused chaos in major markets across India, so lets find out what went wrong?
1] Banks were under supplied: All Indian banks including major banks were not supplied with new notes in advance. Supply of notes begin only after the announcement was made.Banks should have first being supplied with enough quantity of new notes so as to prevent any confusion or shortfall which happens. Also Banks were not properly having stocks of Rs 100 notes which should have been increase following this measure.
2] Indian Rupee is not exported: Since India does not export its Rupee, many people outside India suffered due to lack of Indian currency notes. Indian notes are accepted in Nepal and Bhutan, and also exchanged in major Middle eastern exchanges, India should have exported atleast some amount of money directly to these suppliers immediately after the announcement so as to prevent any chaos. Now they are dependent on visitors from India to get their new notes.
3]Inadequate limit : Indian government has limited its citizens to exchange currency upto Rs 2000 per head which is not adequate compare to the inflation.
Due to these reasons Indian Currency demonetization was a half hearten project which could have done with finesse if these majors would have been taken.
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