Define Demonetisation. What are the purposes served by Demonetisation of currency?
Define Demonetisation. What are the purposes served by Demonetisation of currency?
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Demonetisation is the process of detaching a currency unit from its status as legal tender in the country. This process results in total or partial change in the existing national currency where the present currency unit in circulation is pulled off and new currency unit is circulated.
The various purposes served by Demonetisation of currency include:
(i) It helps to combat corruption, crime, inflation, counterfeit currency and tax evasion
(ii) It encourages cashless economy
(iii) It sometimes facilitate trade also
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