Rishabh Baheti

13 Years



Demonetisation India 2016 : Explained for Kids | By Rishabh,14, Surat

Have you heard of Demonetisation? 14-year-old Rishabh from Surat does a critical analysis of this economic move by India in 2016. 

Demonetization explained for kids bookosmia

In November 2016, Indian Prime Minister Narendra Modi announced a historic decision that would change the economic landscape of India and have far-reaching implications for the nation’s future. It was the demonetisation policy that aimed to tackle corruption, black money, counterfeit currency, and promote a cashless economy. When it was announced, it generated mixed responses and sparked intense debates. The intention was to shape a more transparent and digitally-driven India.

Did it succeed in its mission? Let’s look back. 


India has long struggled with issues related to corruption, black money, and the circulation of counterfeit currency. To combat these problems, the government decided to render 500 and 1,000 rupee notes as illegal tender overnight. 


Objectives of Demonetization: 


  • Combating corruption: The move was aimed at those who hoard unaccounted wealth and cash. 


  • Curbing black money: Black money means income that is illegally earned and is not shown on records. Through demonetisation, the government sought to flush out this unaccounted money from the system. This meant that people had to disclose their wealth and pay taxes. 

Demonetization explained to kids bookosmia


  • Counterfeit currency : With the introduction of new currency notes, counterfeit notes could be removed out of circulation and counterfeiters would find it challenging to replicate the new design.

Demonetization explained for kids Bookosmia

  • By encouraging the use of digital transactions and electronic payments, the government aimed to reduce the dependence on cash. 

online payment demonetization explained to kids Bookosmia


Impact of demonetisation 


The immediate aftermath of demonetization presented several challenges, including a severe cash crunch, long queues outside banks and ATMs, and disruption of daily economic activities. The common man faced hardships in accessing money for essential needs, especially in rural areas. 

ATM queue demonetization kids India Bookosmia

However we witnessed an increase in tax compliance and a growth in usage of mobile wallets, UPI transactions and UPI-based applications. 


The sudden withdrawal of a substantial portion of currency notes impacted sectors dependent on cash transactions, such as agriculture, real estate, and small-scale businesses.

demonetization explained to kids bookosmia

However, the move also paved the way for increased transparency.


Demonetisation generated a range of political reactions. While some praised Modi’s decision as a significant step towards eradicating corruption, others criticized the policy, citing its adverse effects on the economy and the hardships faced by the common people.


While it might not have completely achieved all its intended goals, it did bring certain issues to the forefront and spurred a wave of digital transactions. 


Featured Image source : https://newindian.in/was-demonetisation-a-good-idea-explained/amp/

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