Page 111 - English Grammar - IX-X

IX. Read the following passage carefully.

DEMONETISATION IN INDIATION IN INDIA
DEMONETISA
(1) Demonetisation is a policy in which a currency unit loses its legal tender status. It is
set in motion whenever the national currency is changed: the existing form or forms
of money are removed from circulation and retired, and new notes or coins are
issued in their place. A country’s old currency is occasionally totally replaced with
new currency.

(2) The Indian government decided to demonetise the 500 and 1,000 rupee notes, the two
largest denominations in its monetary system, on November 8, 2016. The country’s
circulating cash was made up of 86% of these notes. Prime Minister Narendra Modi
stated to the citizens that these notes would be rendered ineffective with immediate
effect, with little warning. People were given until the end of the year to deposit or
exchange their notes for the freshly released 2,000 and 500 rupee notes.

(3) The government aimed to combat India’s thriving underground economy on several
fronts, including eradicating counterfeit currency, combating tax evasion (only 1% of
the population pays taxes), eliminating black money accumulated through money
laundering and terrorist financing, and promoting a cashless economy.

(4) Individuals and businesses possessing large sums of black money obtained through
parallel cash systems were compelled to take their big-denomination notes to a bank
and account for them adequately, as well as provide proof of tax payment. A penalty
of 200 per cent on the tax payable was levied if the owner could not give proof of
making any tax payments on the cash.
(5) Take a look at the results of the poll below on people’s cashless transactions. Data
collected points to a growth in the use of non-cash payment methods, notably as
a percentage of total consumer spending, possibly among metropolitan consumers.
When comparing RBI statistics with National Accounts data, spending on credit
and debit cards at point-of-sale terminals as a share of personal final consumption
expenditure has nearly doubled since before demonetisation.

(6) Many Indians have shifted to non-traditional payment methods. Mobile wallet firms
that enabled simple transactions through a vast network of partners were the biggest
winners. Paytm, which is funded by Alibaba, saw a sevenfold growth in overall traffic.
Customers found prepaid cash cards to be another valuable choice. Other options
included e-commerce-linked mobile payment systems such as Ola Money, FreeCharge,
and Flipkart Wallet.

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