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SURGICAL STRIKE ON BLACKMONEY

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Currency notes of Rs.500and Rs.1,000 denomination that are currently in circulation will no longer be legal money and cannot be used as medium of exchange from Tuesday midnight,as Prime Minister Narendra Modi in a surprisemoveclampeddownonblackmoney as well as counterfeit notes in circulation.Instead,the Reserve Bank of India(RBI)will issue new Rs.500 and Rs.2,000 currency notes on Thursday.“The arrangement of buying and selling through existing Rs.500 and Rs.1,000 notes will not be available.These will be just worthless piece of paper,”Modi said in his hurriedly announced address to the nation on Tuesday evening.
Existing currency notes of Rs.1,2,5,10 and 100 denomination as well as coinscontinue to be legal and could be used for buying and selling.
Economists said the move would immediately press a pause button on transactions that were planned in black money.On the other hand,ordinary transactions such as buying of vegetables from the local market might be hit for a month, they added.Also,commodity prices might move up as black money supply get schoked.However,in a series of tweets,the Prime Minister’s Office said realestate prices, health care and higher education would come with in the rech of thec ommon man, thanks to this move.
According to one estimate,the cost RBI is incurring for printing a Rs.1,000 note is Rs.3.17,while a Rs.500 note costsRs.2.50.
The PM said the steps taken by the government would strengthen the hands of the common citizens in the fight against corruption,black money and counterfeit notes.
To enable people dispose of their existing Rs.500 and Rs.1,000 notes,Modi announced these could be deposited in banks and postoffices between November 10 and December 30 by showing ID proofs.
Business Standard New Delhi,09th November 2016

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