The demonetization of Rs 500 and Rs 1000 has made people lose faith in indian currency as indian citizens will not store their money in the form of currency or even keep it in the bank, as they do not know what will happen tomorrow because of the arbitary decisions of the government. They will prefer to purchase essential commodities or make some other kind of purchase, which they can easily liquidate at a later date for some money or use it to make some money .
At a shop in panaji, goa, a person who had exchanged his money for new Rs 2000 and Rs 100 notes immediately purchased a mixer for himself as now no one wishes to take the risk of keeping their money in indian currency, especially notes which have no commercial value as no one knows what the governnment will do.
Those who are putting their money in the bank will also try to withdraw it to the extent possible, as they do not know what action the government will take against their bank account, and it remains very difficult to fight the government in a country like india, where the other systems are not strong enough to fight the government
The us dollar is subjected to far more forgery than the indian rupee , however it has never been demonetized because the us government did not want people around the world to lose faith in the us currency. After 10 days, there is no sufficient change in the market, in states like goa, no new Rs 500 notes are being distributed by the banks. It has also affected the faith in the indian currency, and different countries are issuing advisories to their citizens who are in India or planning to visit India.
The media has also reported that there is a massive increase in gold imports as people are likely to invest their money in gold , a commodity, rather than indian currency, which is a piece of paper if the government decides to demonetize at any time. There is no country which decided to demonetize currency in a few hours, without considering the hardship of indian citizens who will waste their time and money trying to get valid currency. If India had a coalition government such a decision would not be taken as the government would fall, it appears that indian citizens are punished for voting in a majority government after decades.
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