indian currency essay in english

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Indian currency.

• Indian currency is called the Rupee.
• It has the symbol ‘₹’.
• We use different notes and coins to buy things.
• The notes are paper money and come in various colours.
• We have notes of 10, 20, 50, 100, 200 and 500 Rupees.
• Coins are small and made of metal.
• They come in 1, 2, 5, 10 and 20 Rupee coins.
• Each note and coin has pictures of important places.
• It is made by the Reserve Bank of India.
• It is a part of our daily life and helps us buy what we need.

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• What Is the Indian Rupee?
• Understanding the Rupee
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Rupee: Definition, Value, and Examples of Indian Currency

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What Is the Indian Rupee (INR)?

The Indian rupee (INR) is the currency of India. INR is the International Organization for Standardization  currency code for the Indian rupee. The currency symbol for the Indian rupee is ₹.

Key Takeaways

• The Indian rupee is the currency of India; INR is its currency code, and the currency symbol is ₹.
• Since India is a cash-based economy, fake currency has been circulated by those engaged in illegal behavior.
• To prevent fraud, the Reserve Bank of India has changed and updated the rupee notes with new security features over the years.
• Various factors can impact the exchange rate of the Indian rupee, including trade flows, investment flows, and oil prices.

Understanding the Indian Rupee (INR)

The Indian rupee derives its name from the rupiya, a silver coin first issued by Sultan Sher Shah Suri in the 16th century.

Coins in India are issued in denominations of 50 paise, one rupee, two rupees, five rupees, ten rupees, and 20 rupees. A paise is 1/100th of a rupee. Coins worth 50 paise are called small coins, while coins equal to or above one rupee are known as rupee coins.

Paper currency or banknotes are issued in denominations of 5, 10, 20, 50, 100, 500, and 2,000 rupees. On the reverse side of paper rupees, denominations are printed in 15 languages, while denominations are printed in Hindi and English on the front side.

The banknotes are updated frequently with new designs, including distinct differences from old Mahatma Gandhi Series of banknotes to the new ones of the same name. The notes include various themes of India's history and heritage.

Security and Counterfeiting of the Rupee

India is a cash-based economy, which has resulted in fake currency being circulated by those engaged in illegal behavior. The Reserve Bank of India (RBI) has had to change and update rupee notes with new security features over the years. Fake notes, which might appear similar to legal notes, are counterfeited by money launderers and terrorists. Typically, the high denominations are the most counterfeited notes.

In 2016, the Indian government announced the demonetization of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series, claiming it would hamstring the underground economy , making the use of illegal and counterfeit cash in funding illegal activity and terrorism more difficult. The 500 note has been replaced by one in the new Mahatma Gandhi Series with enhanced security features.

Special Considerations: Capital and Convertibility Controls

The rupee has been subject to various capital controls and convertibility restrictions over the years. For example, it is illegal for foreign nationals to import or export rupees, and Indian nationals may only import and export rupees in limited amounts.

A country's current account is comprised of the country's savings, investment flows, and the net trade in goods and services. India's current account has no currency conversion restrictions aside from trade barriers.

The capital account measures foreign reserves, business, and institutional flows. The Indian government relaxes and tightens restrictions on foreign investment, putting caps or removing them periodically to maintain a healthy and balanced capital account.

In recent years, the government relaxed foreign investment flow restrictions to boost the weakening currency exchange rate and encourage business investment in the country. Foreign institutional investors and local companies can bring money in and take money out of the country but need to check with the Reserve Bank of India for the current rules and regulations.

The Rupee's Value in Modern Times

In the 19th century, large increases in the quantity of silver production caused a precipitous drop in silver's value, leading to a steep decline in the rupee's value. From 1927 to 1946, the rupee was pegged to the British pound . It was then pegged to the U.S. dollar until 1975. Currently, it mostly floats on the foreign exchange market , with the Reserve Bank of India actively trading the currency to manage its value.

Various factors can impact the exchange rate of the currency, including:

• Trade flows
• Investment flows

India imports oil, and a rise in prices can cause inflation and force the RBI to intervene to support the economy.

Examples of the Indian Rupee (INR)

The denominations of coins and notes in circulation as of March 2024 are:

• 50 paise coin
• ₹1, ₹2, ₹5, ₹10, and ₹20 coins
• ₹2, ₹5, ₹10, ₹20, ₹50, ₹100, ₹200, ₹500, and ₹2000 banknotes

Any changes in which coins or notes are in circulation and accepted as legal tender in India can be found on the website of the Reserve Bank of India .

What Is the Indian Rupee Symbol?

The currency symbol ₹ is used to represent the Indian rupee (INR). It was selected through a public contest and approved by the government of India in 2010.

What Does Rs Stand for in Money?

The rupee sign "Rs" is used for currency in the Seychelles, Pakistan, Nepal, Sri Lanka, and Mauritius. It was also used in India before the introduction of the Indian rupee symbol ₹ in 2010.

Is the Indian Rupee Backed by Gold?

All banknotes that are issued by the Reserve Bank of India are backed by assets such as gold, government securities, or foreign currency assets.

The national currency of India is the Indian rupee. Its currency code is INR, and the rupee currency symbol is ₹. The Reserve Bank of India issues both coins and notes for different rupee denominations, as well as a 50 paise coin. There are 100 paise in one rupee.

India is a cash-based economy, which has led to trouble with counterfeit and other fake currency. The Reserve Bank has reissued multiple denominations of rupee notes with additional security features to combat currency fraud.

Reserve Bank of India. " Mughal Coinage ."

Reserve Bank of India. " Overview: Denominations of Coins and Notes in Circulation ."

Reserve Bank of India. " Frequently Asked Questions Indian Currency ."

Reserve Bank of India. " Bank Notes Security Features of Indian Banknotes ."

Reserve Bank of India. " Museum Republic India Issues ."

Reserve Bank of India. " Foreign Exchange Management Act Notification ."

Reserve Bank of India. " Speeches and Interviews India’s Capital Account Management – An Assessment ."

CNBC. " The Indian Rupee is Under Pressure ."

Reserve Bank of India. " Publications Exchange Rate Policy and Modelling in India ."

The Times of India via Internet Archive Wayback Machine. " Indian Rupee Gets a Symbol, Joins Elite Currency Club ."

BBC News via Internet Archive Wayback Machine. " Indian Contest for Rupee Symbol ."

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Write 10 Lines on Indian Currency

Indian currency, known as the Rupee, is a fascinating topic. It’s not just money, but a reflection of India’s rich history and culture.

You might see pictures of famous personalities and symbols on the notes. Each one tells a unique story about India’s past and present.

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The History of the Indian Currency Notes and its Evolution

The origin of the word “rupee” is from sanskrit word rupya which means shaped, stamped, impressed, coin and also from the sanskrit word “raupya” which means silver. there was a long history of struggle, exploration and wealth which can be traced back to the ancient india of the 6th century bc regarding rupee. the paper currency act of 1861 gave the government the monopoly of note issued throughout the vast expanse of british india..

The origin of the word “Rupee” is from Sanskrit word ‘Rupya’ which means shaped, stamped, impressed or coin and also from the Sanskrit word “raupya” which means silver. The rupee which we keep in our pocket has a strange or perplexing past. There was a long history of struggle, exploration and wealth which can be traced back to the ancient India of the 6 th Century BC. In 19 th century the Britishers introduced paper money into the subcontinent. The Paper Currency Act of 1861 gave the Government the monopoly of note issued throughout the vast expanse of British India.

Below are the interesting facts about how Indian currency notes have evolved over the ages into the rupee of today.

The earliest issuers of coins in the world are the Ancient Indians along with Chinese and Lydians from the Middle East. The first Indian coins were minted in the 6 th Century BC by the Mahajanpadas (the Republic Kingdoms of ancient India) known as Puranas, Karshapanas or Panas.

These coins have irregular shapes , standard weight and are made up of silver with different markings like Saurashtra had a humped bull , Dakshin Panchala had a Swastika and Magadha had several symbols.

Source: www.coinindia.com

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Then Mauryas came up with the Punch Marked Coins minting of silver, gold, copper or lead and Indo-Greek Kushan kings introduced the Greek custom of engraving portraits on the coins.

The Turkish Sultans of Delhi had replaced the royal designs of Indian kings with Islamic calligraphy by the 12 th Century AD. The currency was made up of Gold, silver and copper known as Tanka and lower valued coin known as Jittals.

The Mughal Empire from 1526 AD consolidated the monetary system for the entire empire. In this era evolution of rupee occurred when Sher Shah Suri defeated Humayun and issued a silver coin of 178 gms known as rupiya and was divided into 40 copper pieces or paisa and during the whole Mughal period silver coin remained in use.

Source: www.thebetterindia.com

Rs of 500 and 1000 Note Ban: Benefits & Drawbacks

During the British East India Company i.e. 1600 , The Mughal currency remained popular but in 1717 AD, Farrukh Siyar the Mughal Emperor gave permission to the Britishers or the English to coin Mughal money at the Bombay mint. Then British gold coins were termed as Carolina, the silver coins as Angelina, the copper coins as cupperoon and the tin coins as tinny.

In the 18 th Century, the Bank of Hindostan General Bank in Bengal and the Bengal Bank became the first banks in India to issue paper currency i.e. during this time paper money was first issued in British India.

Source:www.acdn.newshunt.com

This is the first note issued by the Bank of Bengal of Two Hundred and Fifty Sicca Rupees note, September 3, 1812.

With the Coinage Act of 1835 , uniform coinage throughout the country comes. And in 1858, Mughal empire subsequently ended and British crown gained control over one hundred princely states and so, the images on the coins were replaced by portraits of the Monarch of Great Britain Supremacy.

The king George VI replaced the native designs on banknotes and coins but after the revolt of 1857 , he made the Rupee as the official currency of colonial India.

In the honour of Queen Victoria in 1862 , series of bank notes and coins were issued with the Victoria portrait.

Finally, the Reserve Bank of India was set up in 1935 and empowered to issue Government of India notes. It had also printed 10,000 rupee notes and was later demonetised after Independence. And the first paper currency issued by RBI was a 5 rupee note bearing King George VI’s portrait, in January 1938.

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After gaining Independence in 1947 and in 1950s when India become Republic , India’s modern Rupee reverted back to the design of signature Rupee coin. The symbol chosen for the paper currency was the Lion capital at Sarnath which replaced the George VI series of bank notes. So, the first banknote printed by the Independent India was a 1 rupee note.

Do you know the history of 1 rupee note: One rupee note was issued on 30 November,1917 under the British Raj. During the first world war British domination was there. At that time one rupee coin was a silver coin. But because of the war, condition became worse and one rupee coin of silver was not able to generate. And due to this first time in front of people one rupee note issued and the image of George V was inbuilt in the note. Printed in England this one rupee note value was very less as compared to others.

Source: www.google.co.in

In 1969 Reserve Bank of India issued the Mahatma Gandhi Birth Centenary Commemorative design series on Rs 5 and Rs 10 notes.

And amazing thing is that the vignette of the Sailing Boat or Dhow remained on the reverse of the Ten Rupees for over 40 years.

Source:www.google.co.in

In 1959 a special issue of rupees ten and Rupees One Hundred were issued for the Indian Haj Pilgrims so, that they can exchange it with local currency in Saudi Arabia.

Even in 1917-1918 the Nizam of Hyderabad had given the privilege to print and issue their own currency.

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In World War I , due to shortage of metal the princely states of Morvi and Dhrangadhra issued currency notes of limited liability known as Harvala .

During World War II also because of shortage of metal, 36 Princely States mainly Gujarat, Rajasthan, Sind, Baluchistan and Central provinces issued paper tokens instead of coins.

Finally, in 1996 The Mahatma Gandhi series of paper notes were introduced.

Source: www.1.bp.blogspot.com

Always we see the picture of smiling Mahatma Gandhi on our notes which remains same on currency notes. Some says that Picture of Mahatma Gandhi is a drawn caricature but this is not true. Actually in reality this picture was taken by an unknown photographer in 1946 and from there it is cropped and used everywhere. The Picture is given below:

Mahatma Gandhi was standing with next to Lord Frederick William Pethick-Lawrence. He was a great politician and a leader of the woman suffrage movement in Great Britain. This picture was taken at the former Viceroy House, which is at present known as Rashtrapati Bhavan . And this image is used on the Mahatma Gandhi series of bank notes which was introduced by RBI in 1996.

Devaluation of Indian Rupee: Reasons & History Since 1947

In November 2001 , Rs 5 denomination was issued with Mahatma Gandhi image in front and back side of it shows farm mechanization process i.e. the progress through agriculture.

In June 1996 , Rs 10 was issued with front image of Gandhi and at reverse it represents the fauna of India which symbolises the biodiversity.

Earlier in 1981 , Rs 10 consists of the lion capital our emblem at front of it and at reverse it represents our Indian Art of peacock which is our national bird.

Source: www.banknotes.com

In August 2001 , Rs 20 was issued with same front image of Gandhi and at reverse was the image of Palm trees from the Mount Harriet and Port Blair lighthouse as viewed from Megapode Resort, PortBlair.

Earlier in 1983-84 , Rs 20 bank note was issued in which at reverse of it consists of the Buddhist wheel .

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In March 1997 , Rs 50 was issued consisting of Mahatma Gandhi image at front of it and at reverse Indian Parliament.

In June 1996 , Rs 100 was issued with front image of Mahatma Gandhi and at reverse of it represents Himalaya Mountains .

In October 1997 , Rs 500 was issued at which front image is of Mahatma Gandhi and at reverse of it was the image which represents the Dandi March i.e. Salt Satyagraha which was considered as the wider Civil Disobedience Movement launched by Gandhi Ji on 12 March, 1930 against the British salt domination in India. In which Gandhi Ji and his followers will marched from his Sabarmati Ashram near Ahmedabad to the Dandi, a coastal village in Navsari dist Gujarat and prepared salt without paying tax to the British Government . In this way Salt law was broken by Gandhi on 5 th April 1930.

In November 2000 , Rs 1000 was issued with the front image of Gandhi and at reverse of it represents the economy of India which has Grain Harvesting i.e. agricultural sector, oil rig; manufacturing sector, Space Satellite dish; Science & research, Metallurgy; Mines & Minerals and a Girl working on a computer; Inclusive Technology.

Source: www upload.wikimedia.org

After 2000, details of Indian Currency Notes are given in the form of table:

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Indian Currency: History, Languages, and Imporant Facts

Important information about indian rupee:.

The Indian Rupee with its symbol ₹ and code INR is the national currency of India. And currently its market regulator and issuer is the Reserve Bank of India. The Indian Rupee emblem was chosen on 15 July 2010, designed by Professor D. Uday Kumar, IIT, Guwahati. India is the fifth country in the world, which is recognized by its symbol.

The word Rupee in India has its origin in the Sanskrit word rupa or rupyah, which means silver and rupyakam, meaning silver coin. The term was first used by Sher Shah Suri during his reign in India from 1540 to 1545. And this word was in vogue in India even during the British Raj.

Languages used in Indian currency:

A total of 17 languages ​​have been written in all the notes of Indian Rupee, which shows that its quantity has been written in 17 languages. On the obverse, the sect is written in English and Hindi. On the reverse is a language panel that displays the denomination of the note in 15 of the 22 official languages ​​of India. The languages ​​are displayed in alphabetical order. The empaneled languages ​​are Assamese, Bengali, Gujarati, Kannada, Kashmiri, Konkani, Malayalam, Marathi, Nepali, Odia, Punjabi, Sanskrit, Tamil, Telugu and Urdu.

History of Indian Rupee:

In 1862, a series of banknotes and coins with Victoria's portrait were issued in honor of Queen Victoria. After which the first Reserve Bank of India was established in the year 1935, the Reserve Bank of India was given the right to issue Government of India notes. The Reserve Bank also printed a note of Rs 10,000 and but it was discontinued after independence. The first currency note issued by RBI was the Rs 5 note with the picture of King George VI on it.

This note was printed in 1938. After independence in 1947 and when India became a republic in 1950, the modern Indian rupee regained its design. The top pillar of Ashoka bearing the Chaturmukh Singh of Sarnath was chosen for the paper note. It replaced George VI's being printed on banknotes. Thus the first banknote printed in independent India was the Re 1 note.

Important information of all Indian currency notes:

Important information about indian ₹1 note:.

• Currently, it is the smallest Indian banknote in circulation.
• It is the only note to be issued by the Government of India.
• This note bears the signature of the Finance Secretary.
• At present, this note issued by the Government of India is 97 mm in width and 63 mm in height.
• The picture of Sagar Samrat oil rig is displayed on it.

Important information about Indian ₹2 note:

• This note was the second smallest Indian note.
• It was introduced in 1943 and withdrawn from circulation in 1995.

Important information about Indian ₹5 note:

• It is the second smallest Indian note currently in circulation by the Reserve Bank of India.
• The Reserve Bank of India introduced the Rs 5 banknote in the Mahatma Gandhi series from the year 1996.
• But the printing of notes in these denominations has been stopped by the Reserve Bank of India.

Important information about Indian ₹10 note:

• The ₹10 note issued by the Reserve Bank of India has a width of 123 mm and a height of 63 mm.
• The base color of the note is chocolate brown.
• Historical number 10 in Devanagari displayed on the note
• In the center of the note is a portrait of Mahatma Gandhi.
• 'RBI', 'Bharat', 'INDIA' and '10' are written in micro letters on the note.
• The demonetised security thread is 'India' and RBI with inscriptions on the note.
• The Ashoka Pillar is displayed on the right side of the note.
• Mahatma Gandhi portrait on the note and ₹10 inscription by electrotype, both displayed by watermark.
• The numbers on the note move along the number panel from top to left and from left to right, going down.
• The year of printing of the note is written on the left side of the note.
• Like other Indian Rupee banknotes, the ₹10 banknote has its amount written in 17 languages.

Important information about Indian ₹20 note:

• The Reserve Bank of India on 26 April 2019 has announced that it will soon launch a new 20 note will be issued.
• The ₹20 note issued by the Reserve Bank of India has a width of 129 mm and a height of 63 mm.
• The base color of the note is greenish-yellow.
• This note has Braille facility for the visually impaired.
• On the reverse side of note is the famous Mount Harriet in the Andaman and Nicobar Islands.
• The note has the latent image of the denomination of the banknote on the vertical band next to the right hand side of Mahatma Gandhi's portrait.
• Watermark of Mahatma Gandhi on the note which is a mirror image of the main portrait.
• Like other Indian Rupee banknotes, the ₹20 banknote has its amount written in 17 languages.
• The number panel of this banknote is printed in embedded fluorescent fiber and optionally variable ink.

Important information about Indian ₹50 note:

• This note was officially announced on 18 August 2017 and is currently in circulation.
• The new version of the note depicts Hampi with a chariot on the reverse.
• The ₹50 note issued by the Reserve Bank of India has a width of 135 mm and a height of 66 mm.
• The base color of the note is Fluorescent Blue.
• The note features other designs, geometric patterns, which align with the overall color scheme.
• Gandhi's watermark on the note which is a mirror image of the main portrait.
• Like other Indian Rupee banknotes, the ₹50 banknote has its amount written in 17 languages.

Important information about Indian ₹100 note:

• On 10 November 2016, the Reserve Bank of India announced the introduction of a new redesignated ₹100 banknote as a part of the Mahatma Gandhi New Series.
• On 19 July 2018, Reserve Bank of India unveiled the revised design of ₹100 banknote.
• The new banknote has a picture of Rani ki Vav on the reverse side.
• The base color of the note is lavender.
• Rani Ki Vav, Patan is located in Patan district, Gujarat, India. It is a UNESCO World Heritage Site.
• The ₹100 note issued by the Reserve Bank of India measures 142 mm in width and 66 mm in height.
• It features Braille script to assist the visually impaired in identifying currency.
• On the note from the reverse side there is a view of Goicha La, a high mountain pass in Sikkim, India and located in the Himalayan range.
• On the vertical band next to the right hand side of Mahatma Gandhi's portrait on the note is the latent image of the denomination of the banknote.
• Like other Indian Rupee banknotes, the ₹100 banknote has its amount written in 17 languages.

Important information about Indian ₹200 note:

• The ₹200 note issued by the Reserve Bank of India measures 142 mm in width and 66 mm in height.
• On 25 August 2017, the Reserve Bank of India introduced ₹200 banknote, a new note in the Mahatma Gandhi series.
• The new version of this note has a depiction of Sanchi Stupa on the reverse, depicting the cultural heritage of the country.
• The base color of this note is Bright Yellow.
• As announced by the Reserve Bank of India, the new ₹200 denomination banknotes were issued in circulation from 25 August 2017 on the occasion of
• Ganesh Chaturthi.
• Like other Indian Rupee banknotes, the ₹200 banknote has its amount written in 17 languages.

Important information about Indian ₹500 note:

• The previous banknotes of the Mahatma Gandhi series between 2016 were demonetised on November 8, 2016.
• The Indian ₹500 banknote is a denomination of the Indian rupee.
• The current ₹500 banknote, in circulation since 10 November 2016, is a part of the
• Mahatma Gandhi New Series.
• The ₹500 note issued by the Reserve Bank of India has a width of 150 mm and a height of 66 mm.
• It has Braille facility to assist the visually impaired in identifying the currency.
• On this note there is a latent image of him with the avyakt number 500.
• 'RBI' and '500' are written in micro letter on the left side of this banknote.
• When this note is bent, the color of the thread changes from green to blue.
• The denomination numeral, along with the Rs 500 symbol on this note, is displayed in color-changing ink (green to blue) on the bottom right.
• The base color of this note is Stone Grey.
• The note bears the Ashoka Pillar emblem on the right side along with the portrait of
• Mahatma Gandhi on the Electrotype 500 watermark.
• The reverse side of the note bears the Indian heritage site of the Red Fort and a tag line of the Swachh Bharat Abhiyan.
• Like other Indian Rupee banknotes, the ₹500 banknote has its amount written in 17 languages.

Important information about Indian ₹1000 note:

• On 8 November 2016, Prime Minister Narendra Modi announced that all ₹1000 notes of Mahatma Gandhi series would not be accepted as legal tender from November 2016.
• Like other Indian rupee banknotes, the ₹1000 banknote had its amount written in 17 languages.
• The width of this note was 177 mm and the height was 73 mm.

Important information about Indian ₹2000 note:

• It was introduced by the Reserve Bank of India on 8 November 2016 after the ₹1000 note was discontinued.
• It is India's highest note printed in active currency by Reserve Bank of India.
• The ₹2000 note issued by the Reserve Bank of India has a width of 166 mm and a height of 66 mm.
• The base color of this note is magenta.
• This note has Braille print to aid the visually impaired in identifying the currency.
• On the reverse side of this note is a form of Mangalyaan, which represents India's first interplanetary space mission.
• On this note is the logo and tag line for Swachh Bharat Abhiyan.
• 2000 is written on this note in Devanagari.
• The micro letters 'RBI' and '2000' are written on the left side of this banknote.
• When this note is bent, the color of its thread changes from green to blue.
• The yen note guarantee clause, the promise clause with the governor's signature, and the RBI insignia displayed on the right.
• The note bears the emblem on the Ashoka Pillar, Mahatma Gandhi portrait and Electrotype (2000) watermark.
• The note uses intaglio (raised printing) of Mahatma Gandhi portrait, Ashoka Pillar emblem, bleed line and identification mark for the visually impaired.

Now practice related questions and see what you learnt?

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• History of Indian Economy, Features, Important Facts 🔗
• List of Recognized Stock Exchange of India with Summary 🔗
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Indian Currency Languages FAQs:

In how many languages "Gandhi" is written in the new original 100 rupee currency note with the picture of "Mahatma Gandhi"?

The watermark on the note is of Mahatma Gandhi which is a mirror image of the main portrait. The number panel of this banknote is printed in embedded fluorescent fiber and optically variable ink. Like other Indian rupee banknotes, the ₹100 banknote has its amount written in 17 languages.

According to which system the Reserve Bank of India issues notes?

The Reserve Bank of India issues notes according to the minimum reserve system, in which since 1957, the RBI has to maintain gold and foreign exchange reserves of Rs 200 crore at all times, of which at least Rs 115 crore should be in gold reserves. .

When was the Indian currency system decimalized?

Decimation of India's currency system took place in the year 1957. Additionally, the 'Victoria Portrait Series' notes were the first paper currency officially launched by the government.

What is the main function of money to act as?

Medium of Exchange: The primary function of money is that it acts as a medium of exchange. This means that people can buy and sell goods and services with the help of money. Money is received by the seller of the commodity and money is paid by the buyer of the commodity.

What is meant by devaluation of currency?

Internal prices often fall due to devaluation. Devaluation is a part of economic terminology; When the exchange rate of currency is reduced by a country from the currencies of other countries in order to encourage investment, it is called devaluation.

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Internationalisation of Indian Currency

• 30 Dec 2023
• 10 min read
• GS Paper - 2
• Government Policies & Interventions
• Effect of Policies & Politics of Countries on India's Interests
• GS Paper - 3
• Growth & Development
• Inclusive Growth
• Role of External State & Non-State Actors

For Prelims: Internationalization of Indian Currency , Capital account transactions, Special Vostro Rupee Accounts (SVRAs) , International Trade Settlement in Indian Rupees , External commercial borrowings in Rupees

For Mains: Internationalization of Indian Currency, Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Why in News?

Recently, India has made first-ever payment in rupees for crude oil purchased from the UAE, paving the way for the Internationalization of Indian Currency.

• In July 2023, an agreement with the UAE facilitated Indian Oil Corporation's (IOC) rupee payment for a million barrels of crude from ADNOC (Abu Dhabi National Oil Company). Similarly, some Russian oil imports were settled in rupees.
• India, heavily reliant on oil imports (over 85%), employs a strategy centered on sourcing the most cost-effective oil while diversifying suppliers without breaching international obligations, notably amidst the Russian oil controversy post-Ukraine conflict.

What is Internationalisation of Rupee?

• Internationalization of rupees is a process that involves increasing use of the local currency in cross-border transactions.
• It involves promoting the rupee for import and export trade and then other current account transactions followed by its use in capital account transactions.
• In the 1950s, the Indian rupee was widely used as legal tender in the United Arab Emirates, Kuwait, Bahrain, Oman, and Qatar.
• However, the devaluation of India’s currency by 1966 led to the introduction of sovereign currencies in these countries to reduce reliance on the Indian rupee.
• This can lead to increased convenience and reduced transaction costs for businesses and individuals dealing with India.
• The increased demand for the currency in global markets can help reduce volatility, making it more predictable and reliable for international transactions.
• It can strengthen economic ties with other countries, facilitate bilateral trade agreements, and promote diplomatic relations.
• Fortify Indian Economy: Diversifying settlement currencies can reduce dollar demand and fortify India's economy against global currency shocks.
• It describes the conflict between a country's domestic monetary policy goals and its role as an international reserve currency issuer.
• Opening up the currency to international markets can increase volatility in its exchange rate, especially in the initial stages. Fluctuations can impact trade and investments, affecting economic stability.
• Impact on Import Costs: If the Rupee’s internationalisation leads to increased demand for the currency in global markets, it might strengthen the Rupee against other currencies. A stronger Rupee could potentially reduce the cost of imports from countries like China and Russia, potentially impacting trade balances.
• Limited International Demand: The daily average share for the rupee in the global forex market is only around 1.6%, while India’s share of global goods trade is ~2%.
• Convertibility Concern: The INR is not fully convertible , meaning there are restrictions on its convertibility for certain purposes such as capital transactions. This restricts its widespread use in international trade and finance.
• Demonetization Impact: The demonetization exercise in 2016, along with the recent withdrawal of the Rs 2,000 note, has affected confidence in the rupee, particularly in neighboring countries like Bhutan and Nepal.
• Also, negotiations with Russia to settle trade in rupees have been slow, hampered by currency depreciation concerns and inadequate awareness among traders.
• Developments in the GIFT City
• The ACU is a regional payment arrangement. It facilitates the settlement of trade transactions among its member countries on a multilateral basis. It was established in 1974 by ten central banks of Asia. The ACU currently has 13 member countries. India is a member of ACU.
• Banks from these countries have been allowed to open Special Vostro Rupee Accounts (SVRAs) for settling payments in Indian Rupees.
• In July 2022, the RBI issued a circular on “International Trade Settlement in Indian Rupees”.
• RBI enabled external commercial borrowings in Rupees (especially Masala Bonds ).

What are the Reforms that India Can Pursue to Internationalise the Rupee?

• With a goal of full convertibility by 2060, letting financial investments move freely between India and abroad.
• This would allow foreign investors to easily buy and sell the rupee, enhancing its liquidity and making it more attractive.
• Strong Fiscal Management: Such as reducing fiscal deficits lower than 3.5%, reducing gross Inflation rate to 3%-5%, and reducing gross banking non-performing assets to less than 5%.
• Liberalised Scheme for Personal Remittance: The introduction of a more liberal scheme for personal remittances to facilitate easier transactions for individuals dealing with foreign exchange.
• Removal of Restrictive Clauses for Employee Stock Options: The removal of restrictive clauses related to issuing Employees’ Stock Options at concessional rates, allowing for smoother transactions and operations concerning stock options.
• Name Change and Reorientation of Department: The committee suggested changing the name and reorienting the department responsible for handling the implementation of the Foreign Exchange Management Act, 1999, from the Exchange Control Department to the Foreign Exchange Department, emphasizing a leaner and more strategic task force approach.
• Enabling foreign investors and Indian trade partners to have more investment options in rupees, enabling its international use.
• Optimising the trade settlement formalities for rupee import/export transactions would go a long way.
• India currently has a bilateral swap arrangement (BSA) with Japan for up to USD 75 billion as a backstop line of support in case of any balance-of-payments issues.
• Avoid sudden or drastic changes such as devaluation or demonetisation that can impact confidence.
• Ensure consistent and predictable issuance/retrieval of notes and coins.

The Tarapore Committee's recommendations (in 1997 and 2006), including reducing fiscal deficits, inflation rates, and banking non-performing assets, should be pursued as a primary step towards internationalisation of rupee. Also, advocating for the rupee to become an official currency in international organizations would raise its profile and acceptance.

UPSC Civil Services Examination, Previous Year Questions (PYQs)

Q1. Convertibility of rupee implies (2015)

(a) being able to convert rupee notes into gold (b) allowing the value of rupee to be fixed by market forces (c) freely permitting the conversion of rupee to other currencies and vice versa (d) developing an international market for currencies in India

Q2. With reference to Balance of Payments, which of the following constitutes/ constitute the Current Account? (2014)

• Balance of trade
• Foreign assets
• Balance of invisibles
• Special Drawing Rights

Select the correct answer using the code given below:

a.  1 only b. 2 and 3 c. 1 and 3 d. 1, 2 and 4

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Currency of India in Hindi and English

Related Papers

Dr. Ram Singh

__________________________________________________________________________________ Abstract: This article involves the Historic perspective on Indian currency, fundamental objective of the article is to follow the historical backdrop of Indian currency in Mughal, British and present day time frame. The primary goal of the article is to reflect noteworthy perspective on Indian currency and its paradigms.

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Punch Mark Coins (PMCs) of Gandhara Janapada rank amongst the earliest, and most ancient, if not THE earliest, coins of India. They are of a peculiar 'bent-bar' shape. This article traces its origin, shape, weight standard and why it qualifies as a 'coin'.

Srini Kalyanaraman

See:http://bharatkalyan97.blogspot.in/2016/03/indus-script-hieroglyphs-on-19-punch.html Indus Script hieroglyphs on 19 punch-marked coins (Ancient janapada mints) deciphered as metalwork proclamations http://bharatkalyan97.blogspot.in/2016/03/indus-script-hieroglyphs-on-early.html Indus Script hieroglyphs on early Magadha pre-karshapana 5 punch-marked coins ca. 6th cent BCE deciphered as metalwork catalogues The picture shown in the news report is a Shakya punch-marked coin Shakya Vajji or Lichchavi janapada. 600 to 450 BCE. A dot within a pentagonal circumscript. The Meluhha gloss for 'five' is: taṭṭal Homonym is: ṭhaṭṭha brass (i.e. alloy of copper + zinc). Thus the hieroglyph of a pentagon circumscribing a dot may read 'brass ingot': thattha 'brass' PLUS खोट khōṭa 'A mass of metal (unwrought or of old metal melted down); an ingot or wedge.Silver 5-shana c. 600-450 BCE Weight:7.04 gm., 20 x 20 mm. Central pentagonal symbolwith additional symbol to left/ blank Ref: See Rajgor, 522-531. Why is a pentagon shape chosen as circumscript to a dot (blob)? Consistent with Indus Script Cipher, this signifies pancaloha coin, an ingot made of a 5-metal alloy. The dot of blob is goTa 'round, pebble' rebus: khoTa 'ingot, wedge'. Ancient smiths, Bharatam Janam (an expression used by Rishi Visvamitra in Rigveda) were experimenting with many alloys and many methods of casting metal objects (implements, tools, weapons, even sculptures) using hard alloys and techniques such as cire perdue (lost-wax) casting. This metallurgical heritage should be documented using Indus Script hieroglyhs and disseminated in all schools, the world over. S. Kalyanaraman Sarasvati Research Centre How punch-marked coins replaced barter system M T Saju | TNN | Mar 31, 2016, 01.19 AM IST Punch-marked coins are considered the earliest documented coins in India. Punch-marked coins are considered the earliest documented coins in India. Chennai: When the barter system lost credibility in ancient times, a uniform currency system came into being. But checking the weight and purity of the metal used for this purpose required technical expertise. To overcome the problem, an authentication mark was stamped on the piece of metal to promise that it had adequate purity and weight. The next step was to decide the authority who could assign these guarantee marks on the metal piece. Eventually, the ruling king of the concerned territory was given power to issue coined money. Punch-marked coins are considered the earliest documented coins in India, according to P V Radhakrishnan, curator at RBI Monetary Museum, Mumbai. "These coins are mostly made of silver, and bear various symbols, each of which is punched on the coin with a separate 'punch'. The date generally accepted for these coins is the beginning of the 6th century BC," he said, while speaking on "Significance of the symbols on ancient Indian coins and un-inscribed coins of Tamil Nadu from 500 BC to AD 300," at the department of ancient history and archaeology, University of Madras, on Wednesday. The scholars who studied this series classified them into two groups, local and universal. "The local punch-marked coins generally carry one, two or four symbols and were issued in different weight standard, fabric and execution, varying in different regions or localities. These coins are ascribed to various small and large states (janapadas and mahajanapadas), many of which existed in India from early times," he said. The imperial punch-marked coins, according to Radhakrishnan, uniformly bore five symbols. These coins were issued first by the Magadha dynasty when it was still a janapada. Gradually, Magadha extended its dominions by annexing neighbouring states and became a powerful monarch. "By the time of Ashoka, the Magadhan empire had spread over most of the Indian subcontinent. Its coins also spread with the empire's expansion and have been found in large numbers across the length and breadth of the Mauryan Empire, from Western Afghanistan to today's Bangladesh, and from the Himalayan foothills to the Deccan. The silver punch-marked coins also travelled beyond the Mauryan territory to the Chera, Chola and Pandya kingdoms of South India and to Sri Lanka due to the spread of Buddhism and extensive maritime trade," he said. Radhakrishnan said the Indian silver punch-marked coins are unique and different from other contemporary currencies of the world. Indian coins dating from the 6th century BC to the 3rd century AD reflect the worship of nature, Vedic divinities, Brahmanical and Hindu gods, Yaksha and Yakshi figures, tribal gods, and deities of Buddhism and Jainism. "Copper was prominently used by the Cheras, Cholas and Pandyas. There is no indigenous gold coin known for this period. A large number of silver denarii and gold aurei (Roman coins) were unearthed from various parts of south India. The imperial silver punch-marked coins of the Magadha and Maurya dynasties were also freely exchanged as a medium of exchange all over Tamil Nadu," he added. http://timesofindia.indiatimes.com/city/chennai/How-punch-marked-coins-replaced-barter-system/articleshow/51623892.cms

DNA Newspaper

Mahesh A Kalra

A survey of the monetary history of the Indian subcontinent published in the newspaper DNA to familiarize the lay audience about Indian monetary traditions

Nowa Kodyfikacja Prawa Karnego

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Security features are topographies invisible to the naked eye, such as micro-printing or features visible in ultraviolet, transmitted, and oblique light. The present paper focuses on the examination of Indian currency notes such as 2000, 500, 200, 100, 50, 20, and10 in different light sources and with the help of a compound microscope. This kind of examination is very useful when it comes to distinguishing counterfeit currency from genuine one. Crime is increasing day by day, and so is the making of false currency – this study discusses the numerous security or hidden features which are invisible to the naked eye, and therefore may very well be missed by the potential perpetrator. It is the responsibility of the government along with the issuing authority to incorporate these structures into all travel and security documents, including passports, voter-id cards, and many others. These features are implemented either during the manufacturing of the paper itself (e.g., fluorescent fib...

IJESRT Journal

The Indian rupee is the official currency of the Republic of India.RBI brings new 500 and 2000 Rupee Bank Notes with Braille Features. The authenticity of paper currency is needed for security purpose, as the cases of counterfeit currency increasing day by day. Indian currency also have various security features which are changed or enhanced time to time by Reserve Bank of India to avoid counterfeiting. This paper emphasize on studying various security features on the currency of highest denomination in India that is ₹ 2000 and ₹500 and help to check them by naked eyes. The Indian rupee is the official currency of the Republic of India.RBI brings new 500 and 2000 Rupee Bank Notes with Braille Features. The authenticity of paper currency is needed for security purpose, as the cases of counterfeit currency increasing day by day. Indian currency also have various security features which are changed or enhanced time to time by Reserve Bank of India to avoid counterfeiting. This paper emphasize on studying various security features on the currency of highest denomination in India that is ₹ 2000 and ₹500 and help to check them by naked eyes.

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• Demonetization Of Rs 500 And Rs 1000

Demonetisation Essay - Download Demonetisation Essay PDF for UPSC Preparation

On the heels of The Undisclosed Foreign Income and Assets (Imposition of Tax) act of 2015; and the Income Disclosure Scheme of 2016, the Narendra Modi government had announced demonetization of Rs 500 and Rs 1000 currency, which has been referred to as a masterstroke by many experts.

This article is an essay on demonetisation. It elaborates on the concept, merit and demerits, and the effect of demonetisation in India. It also showcases the critical analysis of demonetisation in India.

The essay on Demonetisation holds relevance for both Prelims and Mains examination of various competitive exams. It is an important topic for the UPSC civil services exam as well.

Table of Contents:

Essay On Demonetisation in India

Concept of demonetisation .

The withdrawal of currencies or other valuables by the central bank to be used as the legal tender in the nation. Such currencies either turn into scrap or a deposited in the banks and replaced by the new currencies. 

Governments of many countries across the world have taken this drastic measure to curb black money and stop the counterfeiting of currency notes. Some countries failed miserably while others were successful in their goals behind demonetization. Let’s take a glance at the countries that underwent demonetisation and the impacts they had to face. 

The Decimal System in the United Kingdom in 1971: The biggest change to the currency of Britain for more than a thousand years took place in 1971 when the British adopted the decimal system. As per this system the pound was divided into 100 pence. The transition of Britain’s currency to decimal was a success as it was done after spreading awareness and doing education campaigns for three years.

African countries:

In the year 1984 during the government of Muhammadu Buhari, Nigeria banned old notes and introduced a new currency. However, the inflation hit, and the debt-ridden country did not make the change well and the economy collapsed. 

Similar is the case with Ghana, another African country that underwent Demonetisation in the year 1982. Ghana wanted to curb tax evasion and empty excess liquidity so they ditched their 50 cedis note. This made the nationalists support the black market and they started investing in physical assets which resulted in further weakening of the economy.

The Government of Zimbabwe in 2015 replaced the Zimbabwe dollar with the American dollar. Before this, Zimbabwe had a currency denomination of 100 trillion Zimbabwean dollars. Now, the multiple currency system is abolished by the Reserve Bank of Zimbabwe and replaced with a new Zimbabwe dollar known as the RTGS Dollar. 

In 1987 the military government in Myanmar invalidated eighty percent of the Myanmar kyat to curb black-marketeering and smuggling.  This demonetisation drive caused terrible economic unease as it had no provision for any exchange of the scrapped denominations. There were mass protests and resulted in the ruthless killing of around a thousand people. 

Soviet Union Monetary Reform 1991: 

In 1991 Mikhail Gorbachev decided to withdraw 50 and 100 ruble notes. It was also known as Pavlov Reform on the name of  Minister of Finance Valentin Pavlov. Due to this reform, the economy collapsed and even resulted in the dissolution of the Soviet Union .

The Australian government was the first to introduce polymer-based plastic notes in 1992. To curb black money and improve the security features, Australia underwent Demonetisation and replaced all paper notes by plastic currency in 1996. As polymer-based notes were already in use for four years, the transition was smooth and didn’t have any impact on the economy.

Pakistan’s central bank, in 2016 decided to phase out banknotes of older design to curb black money and gave the general public six years to exchange their currency. People were notified regarding the change and there wasn’t any chaos in the process. But field officers of the central bank will continue to accept the notes of older design till December 31, 2021.

Demonetisation In India

Basic meaning

• It refers to the decision of RBI/Government to recall the status of a currency note to be used as a legal tender. Usually, all the currencies issued by RBI can be used as a legal tender as the value they carry is promised by RBI and once the value has been demonetized/recalled/revoked, the currency note cannot be used. Globally the central banks follow a practice wherein older currency notes are recalled and new currency notes with enhanced security features are issued to overcome the menace of counterfeit currency.

Why was demonetization done (as per the reasons given by the government in the present case )

• To tackle the menace of black money/parallel economy/shadow economy
• The cash circulation in India is directly connected to corruption hence we want to reduce the cash transactions and also control corruption and thereby move towards cashless transactions.
• To counter the menace of counterfeit currency
• To prevent the cash being used for terrorist activities/terror funding
• It was an ineffective move as only 15% of the high denominations were exchanged
• The rest never surfaced for the fear of stringent penalties by the government. As per the High Denomination Bank Notes (Demonetization) Act, 1978, it barred the transfer and receipt of high denomination banknotes and made any contravention including a false declaration by depositors and others punishable — with a fine or a three-year prison term
• The report concluded that demonetization may not be a solution as black money was largely held in the form of benami properties, bullion, and jewellery. Such a measure would only increase the cost as more currency notes which have to be printed. It could also harm the banking logistics

(In the present age the European Central Bank has announced that it would demonetize €500 note)

• India has one of the highest levels of currencies in circulation which is more than 12% of its GDP value, and the 1000 and 500 rupee notes account for 24.4% (around 2300 crore pieces) of currencies in circulation but over 85% in terms of the value of the currency in circulation Having said so it has to be kept in mind that India is not an outlier in this segment as there are various other countries such as USA’s $100 note and Japan’s ‎¥10000 account for over 80% of currencies under circulation.

Cash is the king – In India majority of the transactions are done in the form of cash

• As per RBI, 87% of the transactions in India are cash transactions
• As per the RBI report, debit cards at ATMs account for 88% and 94% (by volume and value respectively) of the debit card transactions, and 12% and 6% account for POS transactions.
• The infrastructure growth is slow – The POS machines and ATMs are 1.2 million (and there are around 14 million merchants in India, in essence, more than 90% of the merchants are not using the POS machines) and 0.19 million respectively. (From 2013 to 2015, ATMs increased by 43% and POS machines by 28%)
• ATMs and POS machines are concentrated in an urban area
• Penetration in non-urban areas is very poor add to this, the connectivity issues
• Even if the POS machines are installed, low-value transactions are discouraged by the merchants
• The number of cards issued is on the rise
• The acceptance infrastructure has to be placed
• Increasing trade on e-commerce (provided it promotes online payments/transactions)
• The increasing number of digital wallets-Paytm, Pockets, etc
• The government has implemented Jan Dhan Yojana and under this, a large population has been able to open their accounts which will be helpful (in the sense the debit cards issued have increased)

Related links:

• As per the statements given in RS by Arjun Ram Meghawal (Minister of State for Finance), the total FICN is to the tune of Rs 400 Cr
• As per the Lok Sabha Website between 2011 and 2015, the RBI has seized around 26 lakh counterfeit notes of denomination Rs 500 and Rs 1000 amounting to Rs 167 Cr
• Amongst the two, the FICN of Rs 500 currency notes were higher (both in numbers and in value)
• As per a study done by ISI (Indian Statistical Institute), at any given point of time, the FICN is to the tune of Rs400 Cr and annually the FICN pumped into the economy is Rs 70 Cr

Measures taken

• FCORD (FICN Co-Ordination) group has been set up by MHA (Ministry of Home Affairs) to share the information with other security agencies regarding controlling FICN
• The MHA (Ministry of Home Affairs) has set up CCT Cell (Combating Financing of Terrorism Cell) to co-ordinate with FATF (Financial Action Task Force- it’s an intergovernmental body has remarked that high-value bills are used in money laundering schemes, racketeering, and drug and people trafficking)
• TFFC (Terror Funding and Fake Currency Cell) has been set up under NIA ( National Investigation Agency ) to investigate the terror financing using FICN
• MoU (Memorandum of Understanding) has been signed between India and Bangladesh to prevent circulation and smuggling of FICN (the majority of the inflows of FICN is done through Pakistan, Nepal, and Bangladesh)
• Less cash Vs Cashless

The debate has been raging in India over the need for the country to become a cashless economy but the fact of the matter is that a sudden shift from cash-based to cashless will have huge repercussions and not to forget that cash facilitates trade, hence there is a need for India to first move into the less-cash economy (one of the aims in introducing Rs 2000 note) and then move towards becoming a cashless economy

• The intelligent always find a way around when the currency is demonetized
• It becomes much more difficult if they have stored the black money in other forms-gold, asset, etc
• So the way out is that rather than running behind these measures, we must implement the systems, procedures which will bring all those who are supposed to pay the tax, under the tax bracket and we can collect the appropriate taxes from them (as in India, the highest rate of taxation is around 33%, whereas in America, after including the federal and state taxes the tax rates are around 50% and in case of UK it is hovering around 45%)

Analysis of Demonetisation in India

• The menace of black money can be controlled to some extent
• Terror financing, using black money for illegal activities, etc will all take a hit
• The counterfeit currencies which have an impact on the real economy will be rooted out
• The mobilization of deposits in the banks will increase, which may lead to increased credit flow and lowering of lending rates
• The black money adds to the inconspicuous demand and hence the inflation to some extent will be under control
• The government is also aiming to raise its revenue collection (eg- by taxing exorbitant IT rates over certain deposits, the tax collection in other forms will also increase, etc)
• Real estate is one of the major sources of black money generation. With this move, it is expected that the property market rates may bottom out or moderate
• It’s a major step by the government towards forming a cashless economy
• The honest workers will be rewarded under such a scenario
• The elections are usually associated with black money generation and circulation, with this scheme the funding of elections through nefarious ways will be hit
• It is expected that with this move the Fiscal Deficit of the government may come down
• For one all the black money is not stored in the form of cash only and secondly, the measure takes care of the result but not the cause-black money is generated mainly because of corruption and tax evasion. This measure controls the usage of black money but cannot control the causes
• Sudden and huge demand for the new currencies
• Panic amongst the common man (already we have seen the case wherein people have looted fair price shop in MP, Cash Carrying companies seeking higher insurance, etc). already the panic has led to people hoarding currencies which have further reduced the liquidity in the market
• The small trade/shopkeepers are facing difficulties
• Black marketing of the new notes/currencies is on the rise
• The establishments such as banks, hospitals, etc are under a lot of stress
• Another area that is a cause of worry is the likely drop in the rural demand as the cash usage will become restricted. Apart from this, the experts are also expecting an impact on the SME sector, agricultural production (the economy was expected to perform well as there was an expectation of a good rabi crop after two bad monsoons but a prominent economist, Pronab Sen has said that demonetization is akin to third bad monsoon year as it will have an impact on agricultural production, but the more dangerous situation is this having a spillover effect on to fertilizer, tractor sectors)
• Only 27% of the villages have a bank within 5 Kms (as per Economic Survey 2015-16)
• Despite recording breaking implementation of JDY, the banking penetration is low-on an average 46% in all the states (as per Economic Survey 2015-16)
• Another challenge in implementing and eradicating black money would be the presence of the informal economy. It accounts for 45% of GDP and 80% of employment hence this move may have a greater impact on the informal economy
• Logistics and cost challenges of replacing all the Rs 500 and Rs 1000 notes – as per the RBI documents this measure would cost at least Rs 12000 crore as it has to replace over 2300 crore pieces of these currencies
• The decision to issue Rs 2000 denomination currency and withdrawal of Rs 500 and Rs 1000 currency will lead to huge challenge as most of the day to day transactions in India are centered around Rs 500 note (more than 47% of the value of notes in circulation is in Rs 500 note form)
• The availability of Rs 500 and Rs 1000 notes will be the biggest challenge as both of them covered over 85% in terms of the value of total currencies issued
• The process has led to huge rush and long queues of the people in front of ATMs and as per the statement of the finance minister the ATM recalibration would take around 2 to 3 weeks
• As per data furnished by the Finance Ministry, Rs 17,50,000 crore worth of currency notes were in circulation in October-end, out of which over 85% percent or Rs 14,50,000 crore is in the now-defunct Rs 500 and Rs 1,000 notes. So far for the first four days, the government has been able to pump in Rs 50000 cr (on an average 12500 Cr). Going by these numbers it would take around 4 months to replace these notes as against the 50 days promised by the PM

• The rural demand even after a good monsoon is unlikely to pick up and agriculture production is unlikely to achieve a 3.5 to 4% GDP growth rate
• As per Prof Bhanumurthy (NIPFP), all the black money may not find its way to the banks hence GDP growth rate may come down by 1.1% (the professor has also remarked that the money which was not there in the system is being pumped in and add to this if the online transactions are promoted then the GDP growth may pick up rather than declining)
• As per economist Pronab Sen, this may lead to a lowering of GDP by 0.2 to 0.3%, and in extreme cases, we may end up achieving 7% (targeted is 8%)
• The opportunists

The online service providers have up their ante when there is a shortage of currency notes, pushing their products/services by providing discounts, coupons, credit, etc. For example, Paytm, which is the largest mobile wallet company, has said that it (since the ban kicked in)

• Has seen a 700% increase in overall traffic on the platform
• 1000% growth in the value of money added to the Paytm accounts
• The average transaction value has increased by 200%
• Mobile app downloads have increased by 300%
• Has processed around 5 million transactions each on 12 th and 13 th (Saturday and Sunday respectively) of this month

There is no doubt that the coming months will be painful for the common man, small businesses, housewives, etc as there will be some shortage of legal tender/currency that will have an impact on them. Another rising issue will be that the demand for POS machines, Debit Cards which has to be resolved lest the measures will become an obstacle rather than the solution.

If these measures are implemented efficiently then we can expect a higher collection of taxes, higher investments in the market, price corrections, improvement of India in some of the international rankings, prevent corruption practices, etc and these are some of the reasons why people, although are going through difficulties, are lauding this measure of the government

But after having discussed so much, will this measure eliminate all the black money in the economy? The answer simply would be a confirmative NO as it has been seen that the black money is stored in various forms other than cash (such as gold, jewellery, assets, etc) and as per A 2012 report prepared by the National Institute of Financial Management – on unaccounted income – found that cash was the least preferred option for storing unaccounted wealth

Measures by the Government to control black money

• One of the first cabinet decisions taken by the government was to set up SIT (Special Investigation Team) on Black Money
• The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, came into force on July 1, 2015, under which the tax rate imposed was 60%
• Further upon the leaks of the Panama Papers, the government constituted a Multi-Agency Group (MAG) comprising officers of the Central Board of Direct Taxes , Reserve Bank of India, Enforcement Directorate, and Financial Intelligence Unit.
• Lok Sabha recently has passed the Benami Transaction Bill, 2015 which is an anti-black money measure that aims to seize unknown property and prosecute those indulging in such activities.
• This year the government has amended its DTAA’s and is in negotiations with some other countries
• It is also under negotiations with the authorities in Switzerland in signing Automatic Exchange of Information (AEOI)
• In this year’s budget government had announced IDS (Income Declaration Scheme) under which it has successfully collected Rs 65,250 crore in the form of taxes .

Aspirants can download the Demonetisation PDF from the link provided below:

Demonetisation Essay PDF:- Download PDF Here

Frequently Asked Questions about Demonetisation

What do you mean by demonetisation, what is the main aim of demonetisation.

The topic ‘ Demonetisation’ can be asked in either prelims or in Mains (GS 3, or Essay) exams. It makes a good topic for Indian Economy preparation that comes under Mains GS III. Aspirants can refer to UPSC Mains GS 3 Strategy and Syllabus article for more information on GS III preparation.

Aspirants can also practise answer writing for important topics other than Demonetisation Essay, from previous year Indian Economy Questions from Mains GS 3 .

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• Cashless India Essay

An Introduction to Cashless India

A cashless India is the first step towards making the dream of digital India a reality. In this cashless India essay, we will be talking about the meaning of ‘cashless’, the different alternatives for our monetary system, and the disadvantages and advantages of a country going fully cashless and digital in its economy. The following cashless India essay in English is for students studying in class 5 and above. The language here has been kept simple for a better understanding of young students. This essay on the cashless economy in India would enable young students to write an essay on the cashless economy in India on their own. 

As we know that cashless India is the new India and with the decision made by our honourable prime minister to demonetize money used previously, this concept of going cashless has become very popular. Although there are some disadvantages of going cashless, along with that there are more benefits as well. In this essay, you will know about everything that will help you to get better information about the concept of India going cashless. 

Essay on Cashless India

On the evening of November 8, 2016, at 8 P.M., Narendra Modi, the Prime Minister of India announced the demonetization of 500 and 1000 rupees notes in India. That historic decision had many reasons. One of the reasons was laying the stepping stone towards the dream of a cashless India.

The traditional form of monetary transactions happens with the exchange of physical hard cash between people. Cashless India is going to make it almost redundant. This idea has got a huge amount of push due to the ongoing COVID-19 pandemic, given the concerns with the exchange of physical cash. There are a lot of advantages to going cashless. Remember that everything has a positive as well as a negative aspect. It is not that there won't be any disadvantages of going cashless but the thing is that you tend to find the ways by which you can prevent these disadvantages from harming you. All that you need to do is be more careful. As we all know, prevention is always better than cure.

First of all, let’s understand the meaning of a cashless economy. A cashless economy is one in which the liquid transactions through the system happen with the exchange of plastic currency or through digital currency. ATM debit and credit cards are plastic currency and online payments come under digital currency. The advent of blockchain technology has redefined the meaning of a cashless economy through bitcoins. A decentralized system of finance is defined by the concept of bitcoins, but we are not focusing on that in this particular essay on cashless India. We are more focused to discuss why India needs to go cashless and what are the benefits that will come with India taking on this new change. This essay provides you with information on the advantages and disadvantages of the digital payment system also. It is not that you are not going to face any problem in online transactions, you must have heard that a coin has two sides and just like that, this topic of cashless India also has both pros and cons. Let’s move on to the pros and cons of a digital payment system.

We can see the Three Main Advantages of Cashless India.

Reduction of Black Money

Black money is the money that is earned but not accounted for in taxes. That money is hidden by people from paying taxes. This black money is an illegal instrument in an economy that is capable of reducing a government down to bankruptcy. The cashless economy will ensure there’s no black money since unlike hard cash digital money cannot be hidden. At least there is no way yet that could make the hiding possible. Digital money enables governments to track all transactions in an economy that helps keep the income authentic and transparent. The technology behind the digital economy has to be well updated and sturdy though.

Transparency

India has corruption inbred in its system starting from the ministerial level to the watchman level. And it exists due to the lack of transparency in our monetary system. In an economy that is as big as India, transparency is a huge issue. We have learned of scandals like the CWG or 2g scams or the Rafale Jet scams over the years, and these scams are a result of the lack of transparency in transactions. It’s a shame that a small cashless economy in India essay would never do justice to the topic since it will never be enough to write about all of the corruption scandals India has had since its independence. Corruptions of this scale could be brought down to a large extent if we could achieve that dream of a cashless economy throughout. And it's possible because the origin and endpoint of a transaction could easily be tracked in a cashless economy and that’s the biggest advantage.

There are Two Major Disadvantages of Cashless India.

Online Theft

With the improving technology every day, there’s a rampant increase in online cheating and fraud episodes. If the government is unable to achieve sturdy and not-possible-to-hack digital systems, in a country like India with a 135 crore population, it is completely impossible to make the economy cashless. People are still afraid of making big transactions online after watching the reports of online thefts on national news channels.

Infrastructure, or the Lack of it

Not just the government infrastructure, it requires infrastructure on an individual level too. A gadget or a smartphone, data connectivity, and electricity for charging the phones regularly are the basic requirements for making online transactions possible. These are privileges that exist mostly in urban India and most of rural India is still deprived of these privileges. The government should first fix this before even dreaming of making a cashless India possible.

The Government of India took the whole country by storm by announcing the demonetization on 8th November 2016. 500- and 1000-rupees notes were no longer legal tender. This move was aimed at getting rid of the black money in the economy that was largely used to fund criminals and terrorists and formed a parallel economy. The acute shortage of cash led to long queues outside ATMs and banks trying to withdraw cash or exchange notes. This was all to initiate the fruition of a dream of cashless India.

With the enormous amount of technological revolutions happening, it is close to impossible to find people without a smartphone in these times. Almost every citizen possesses a smartphone. The ease of transaction through interfaces like GooglePay or PhonePe or Paytm has never been more seamless than this. The Indian government has also introduced interfaces like UPI or Unified Payments Interface for hassle-free digital transactions that are fully cashless.

In recent years, we have been asked to be in very less contact with each other. This is because of the communicable diseases of Covid-19 that have seen an adverse effect throughout India. For this reason, online payments have recently been the most popular means of transaction. The money will directly get transferred to the account of the user from our account; all you need to do is just download the app that you can use for the transaction. 

In the end, the demonetization step became crucial to start a cashless economy in the country. It has paved the way towards an economy in India that is defined by greater transparency and convenience and ease in monetary transactions.

FAQs on Cashless India Essay

1. Which Country is fully cashless?

There are a lot of benefits of going cashless and most of the benefits are discussed over here. Now the world is more focused on how to go cashless as they are well aware of the advantages that they will have after going cashless. This is the reason that most of the countries are seeking some changes and making constant efforts to make their country cashless. Going cashless will improve technologies and will also increase your economy. That is also one of the main reasons why this world is more focused on going cashless. Sweden could achieve a near cashless economy in the world.

2. Name the different Digital Currencies in the world?

Just as in terms of cash, we have rupees or dollars or pounds and so on. In the same way, it is not like only one kind of digital currency is used throughout the whole world. There are different kinds of currencies that the world uses for online transactions. Litecoin, Bitcoin, Ethereum are some of them that were found to be in existence as of 2020. You need to have good knowledge about these currencies and then you can easily transfer the money. 

3. What are the apps that you can use to transfer money directly into another person's account in India?

In India going cashless is the new normal. People are using online money apps such as Google pay, Paytm, Payz app, PhonePe to make the transactions directly through their phone and bank account but when we talk about the currencies being used currently, Indians are more preferably using bitcoins as their online currency. India is now making efforts to go cashless and increase its economy.

4. How much is India cashless now?

In recent years, at the time of Corona, it was advised to people not to make contact with each other. It was at that time that the cashless India concept was created and the apps like Google Pay etc came into existence. The app was introduced in India before it came into use. In the covid time, most people used the cashless way of payment. The census has proved that 37% of India has not paid using cash since the Corona times.

5. Is it possible to have cashless India anytime sooner?

Given the regency usage and increased usage of the apps such as Google pay and Paytm and the increase in the number of vendors who have accepted this method of online payment, the more India can be cashless. The most difficult thing will be to make the people of India agree to use these online methods of payment and move toward increasing the other economy of India. India too can be cashless; it is just that we need to create awareness among people regarding this.

The Gold Medalist Starring in India’s Olympic Dreams

Neeraj Chopra’s triumph in Tokyo inspired athletes across the world’s most populous nation. Now his country is chasing a bigger prize: a chance to host the Games for the first time.

A wall of fame at the home of Neeraj Chopra, the Olympic champion in the javelin, in Khandra, India. Credit...

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By Jeré Longman and Suhasini Raj

Photographs by Atul Loke

Reporting from Khandra, Panipat, Patiala and New Delhi, India; Eugene, Ore.; and New York.

• July 23, 2024

The boy grew heavy on the milk, cream and butter of his grandmother’s doting. By age 13, Neeraj Chopra weighed nearly 190 pounds, making him one of the biggest boys in his tiny farming village. His father and uncles urged him to join a gym to lose weight. By chance, he saw a javelin being thrown and noticed that, in flight, it seemed to shimmy like a fish through water. He was smitten.

A decade after that improbable beginning, Chopra won the javelin competition at the Tokyo Olympics in 2021. It was the first gold medal ever won by India in track and field, considered the marquee sport of the Summer Games, and only the country’s second in an individual event in more than a century of Olympic competition.

Chopra’s triumph inspired athletes across India, the world’s most populous nation. And as it raised the country’s dreams for more medals at this year’s Paris Olympics, it also helped to stoke a national ambition for something even bigger: a chance to host the Summer Games for the first time.

In October, Prime Minister Narendra Modi declared at a meeting of the International Olympic Committee in Mumbai that India would “leave no stone unturned” in seeking to host the 2036 Olympic and Paralympic Games. That quest could yield another transformative moment for India: a huge national effort both to engage a vast youth population in sports and to leverage one of the last truly global stages as a validation of India’s economic, political and technological primacy.

If India’s bid to host the Games succeeds, the 2036 Olympics will follow a template established over the last 60 years by three other Asian nations — Japan (Tokyo 1964) , South Korea (Seoul 1988) and China (Beijing 2008) — for whom the Summer Olympics served as a symbol of transition and emergence.

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Kargil Day 2024: Kargil Vijay Diwas essay and speech ideas in English for students

Here are a few kargil vijay diwas 2024 sample essay and speech ideas for students to commemorate kargil day, reflecting on the courage and patriotism displayed during the kargil war..

Kargil Vijay Diwas 2024 Sample Essay and Speech in English

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Essay on Cashless India | Cashless India Essay for Students and Children in English

February 14, 2024 by Prasanna

Essay on Cashless India:  The dream of digital India’s first step is a cashless India. With this dream, on the evening of 8th November 2016 at sharp 8 pm, the Prime Minister of India, Narendra Damodardas Modi announced the demonetisation of Rs. 500 and Rs. 1000 notes in the country. This historic decision was based on various reasons, one of which was a dream of cashless India.

In this essay on cashless India, we will be talking about what it means to be cashless, the various alternatives for our monetary system and what are the advantages and disadvantage for a country which has fully gone digital or cashless in its economy.

You can read more  Essay Writing  about articles, events, people, sports, technology many more.

Long and Short Essay on Cashless India in English for Students and Kids

In this article, you will find detailed examples of essay on cashless India with a 600-word limit as well as examples of short essay on cashless India with a 200-word limit that students can use in essay writing competition and assignments during these coronavirus holidays.

Long Essay on Cashless India 600 Words in English

The extended essay on cashless India is helpful to students of classes 6,7,8,9 and 10.

The traditional form of monetary transactions with hard physical cash exchanged between people will almost become almost redundant. And this theory has been given an enormous amount of push by the Covid-19 pandemic, given the health concerns in exchanging physical cash. There are plenty of benefits to going cashless. In this essay on cashless India, we shall be talking about both the advantages as well as disadvantages of a cashless India.

First of all, what does a cashless economy mean?

What is the meaning of a Cashless Economy?

A cashless economy means the liquidity in the system is exchanged between two parties through either plastic currency (ATM debit and credit cards) or through digital currency (online payments). With the advent of blockchain technology, bitcoins have given a whole new meaning for a cashless economy. The concept of bitcoin talks about a decentralized system of finance, but that is not the point of discussing in this particular essay on cashless India. Hence, let us come back to the crux of this essay on cashless India, which are the pros and cons of the digital payment system.

Advantages of Cashless India

• Black money will be reduced: Black money is that money that you have earned but not accounted for which means this is that money which is hidden from paying taxes. And this black money is illegal and has the potential of reducing a government to bankruptcy. But the cashless economy will keep a check on black money because, unlike hiding physical cash, you can’t hide digital money, at least not yet. If the technology behind the digital economy is robust and well updated, then governments can track all transactions in the economy which helps in maintaining transparency and authenticity of income.
• Transparency: Corruption in India exists right from Ministerial level to a watchman level, all because of the lack of transparency in our monetary system. Transparency is a big issue in an economy as big as India’s. Corruption scandals in India like CWG or 2g scams or Rafale Jet scams are broken out because of the lack of transparency in transactions. To be frank, a small essay on cashless India will not be enough to talk about all the corruption scandals in India since its independence. Corruptions like these can be reduced to a great extent if the cashless economy is achieved throughout because the biggest advantage of a cashless economy is that the authorities can track and the origin and the endpoint of a transaction easily.
• Easy and simple: With so much technological revolutions happening around, it will be impossible to find someone without a smartphone in this 21st century. Almost every Indian has a smartphone. Hence the ease of transaction through fintech platforms such as Paytm, google pay or phonepe are easier than ever before. The hassles of carrying hard cash( with possible viruses on it) is eliminated. The government of India has produced platforms such as UPI (Unified Payments Interface) for hassle-free cashless transactions.

Disadvantages of Cashless India

• Hacking and Online Theft: As technology is improving every day, so is online fraud and cheating incidents. Unless and until governments have robust and hackproof digital systems, it would be impossible for them to make the economy, especially a country like India with 135 crore population, completely cashless. Incidents of online thefts reported on news channels have made people think twice before making large transactions online.
• Lack of Infrastructure: We are not just talking about government infrastructure but on an individual level as well. You need a gadget (a smartphone), data connectivity and electricity for charging the phones every day to be able to make online transactions often. But these privileges exist mostly in urban India and not in most parts of rural India. Before aiming for the dream of cashless India to come true, governments should take care of these problems.

Short Essay on Cashless India 200 Words in English

The brief essay on cashless India is helpful to students of classes 1,2,3,4,5 and 6.

Cashless economy is the economy in which physical paper cash will become redundant and all the citizens use smartphones and cards to pay for their transactions. But achieving a fully cashless economy needs a lot of up-gradation of digital infrastructure as well as conducting educational and awareness campaigns for people across the country, especially in rural and economically backward areas.

In the view of making India a cashless economy, Prime Minister Narendra Modi had announced demonetisation of Rs. 500 and Rs. 1000  denomination notes from the country in the year 2016. This led to an increase in online cash transaction in the country by 10 folds. But still, India is not a truly cashless economy. Business across the spectrum increasingly adopted cashless transactions in the view of the changing trends in the country, as a result of which many unicorn startups were given birth to, such as Paytm and phonepe in India.

While there are plenty of benefits for a cashless economy like the ease of transaction, curbing corruption and black money, there are many down comings as well. Some of which is lack of trust in digital transactions, hacking and theft frauds. The government should address these problems immediately with proper resources to make India a truly digital and cashless economy.

10 Lines on Essay on Cashless India

• Demonetisation in 2016 in India was done with the objective of achieving a cashless economy
• Cashless economy means redundancy of physical paper cash
• Paytm, Phonepe and google pay are some of the fintech platforms for digital transactions
• Bitcoin is a new form of digital currency
• Use of credit cards, debit cards and digital wallets are all a part of a cashless India
• Cashless India will help reduce corruption and black money in the country
• The fraudulent transactions can happen over digital money which is a big drawback
• It costs money for the government to print bills and coins which is not necessary for the cashless economy
• It is estimated that 100% cashless economy can never be achieved in the near future
• The government needs to build proper digital infrastructure to make a completely cashless economy in a country.

FAQ’s on Essay on Cashless India

Question 1. What are the types of cashless transactions in India?

Answer: Cheques, demand drafts, UPI, debit and credit cards, NEFT, RTGS and IMPS are some of the cashless transactions in India

Question 2. Which country is completely cashless?

Answer: Sweden has achieved near cashless economy in the world

Question 3. Is bitcoin a good digital currency?

Answer: Yes. A decentralized currency like bitcoin is a great form of currency to improve transparency

Question 4. What are the different digital currencies in the world?

Answer: Bitcoin, Litecoin, Ehterim are some of the digital currencies in existence as of 2020

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Demonetization Essay for Students and Children

500 words essay on demonetization.

Demonetization refers to the act of stripping a currency as legal tender. In demonetization, the current form of money is removed from circulation and retired. Furthermore, the replacement of this form of money occurs with new notes or coins. Sometimes, a nation completely introduces a new currency in place of old currency. Most noteworthy, demonetization is a move in which a government bans the notes or coins of a certain denomination.

Advantages of Demonetization

First of all, demonetization significantly reduces corruption from taking place. It certainly puts a full stop to corrupt practices. Demonetization significantly hampers individuals dealing in black money from carrying out their evil ideas. Most noteworthy, corrupt people in the future will feel scared of hoarding cash.

Demonetization improves the banking system significantly. Demonetization would certainly infuse more sophistication in the banking system . The economy of a nation will move into a cashless direction due to demonetization. Moving in the cashless direction would mean better access to credit and revamping of financial operations.

Another notable advantage of demonetization is reduced liability for the government. This is because demonetization reduces the risk and liability of liquid currency. Furthermore, handling soft money is far easier than handling hard money. Also, every note is a liability for the government. Hence, demonetization reduces this liability by removing certain notes from circulation. Therefore, the old currency becomes useless for those who don’t disclose their income.

Demonetization will lead to fewer instances of tax avoidance. This certainly is a massive advantage of demonetization. Money that is deposited will be taken track of by income tax authorities. Therefore, people will hesitate to use tax avoidance tactics. Furthermore, the loan transaction will also be under scrutiny. Consequently, there would be an increase in the flow of taxes. This would certainly result in government undertaking more public welfare measures.

Get the huge list of more than 500 Essay Topics and Ideas

Challenges in Demonetization

The first challenge is the internet connection and availability. Due to demonetization, many people would go cashless. Therefore, they would resort to E-cash and E-payment. However, in many developing nations, internet connectivity is quite poor. Hence, this forms a major challenge for any government which intends to implement demonetization.

Cash shortage is a natural consequence of demonetization. The scarcity of cash can certainly lead to chaos. This is exactly what took place during the 2016 Indian banknote demonetization. Furthermore, people face various difficulties in depositing or exchanging the demonetized banknotes. Also, the ATM’s can run short of cash for many weeks or months.

Rural areas face huge trouble due to demonetization. This is because rural areas and the agricultural sector highly depend upon cash. Furthermore, these people lack the financial literacy to handle the situation. Moreover, most people in such areas are ignorant of computing technology and the cashless economy.

To sum it up, demonetization is certainly a revolutionary step in a country’s economic system. It is something that has been practiced by countries from time to time. Furthermore, the objectives for demonetization remain more or less the same the world over. Most noteworthy, the decision to demonetize should come by keeping the national interests at the forefront.

600 Words Essay on Demonetization

Demonetization happens when a government legally bans the coins and notes of a certain denomination. The currency which is banned may or may not be replaced by the new currency. The aim of Demonetization is to target multiple problems like illegal activities and their funding source, terrorism, tax evasion, and counterfeit currency.

Effects of Demonetization

Demonetization has long term effects on a nation’s economy. The people in the rural areas who did not have access to internet and plastic money were majorly affected. Since centuries, governments have been using it as a tool to reduce corruption and other illegal activities. Thus, Demonetization boosts a nation’s economy by removing fake currencies and bringing black money into the mainstream.

Positive Effect of Demonetization on Economy

• Break Down of Black Money : – Black money accumulation impacts a country’s economy negatively. Demonetization helps in closing businesses running by black money and destroying the black money savings of the people, thus having a positive impact on its economy.
• The decline in Fake Currency Notes :- A number of fake currency notes circulating in the country have a bad impact on its economy. Hence, Demonetization helps in removing the high-value of fake currency notes.
• Increase in Bank Deposits :- The circulation of the old currency notes is banned and those who have these currency notes should deposit them in the banks so that their money did not get wasted. Hence, cash amounting to trillions of rupees gets deposited in the banks.
• Real Estate :- Real Estate is one industry that runs largely on black money. Demonetization stops the flow of black money in the real estate sector to ensure a fair play.
• Increase in Digital Transactions :- The cash crush in the market encourages people to make digital transactions. Almost everywhere in the country machines get installed to accept debit/ credit card payments. Over time people start using plastic money. This is a great way to track tax evasions.
• Cutting Monetary Support for Terrorist Activities :- Anti-nationals support terrorist activities in the country by providing monetary support to the terrorist groups. This money is used to purchase arms and plan terrorist activities in different parts of the country. Demonetization helps in cutting down on the monetary support provided to the terrorist groups to a large extent. It thus promotes peace and helps the country prosper at various levels.

Negative Impact of Demonetization on Indian Economy

Most of the positive impacts of demonetization are long term. We may begin to see the country’s economic growth after demonetization in a few years from now. However, the negative impact of demonetization on the Indian economy has been tremendous.

Many of cash-driven small industries are left starving. Many manufacturing industries suffered huge losses thereby impacting the economy of the country negatively. Also, many factories and shops had to be shut down. This did not only impact the businesses but also their workers. Thus, several people, especially the laborers, lost their jobs.

There is a shortage of cash as old money is exchanged with the banks. The government was blamed for poor planning and management. Indian National League also filed a Public Interest Litigation (PIL), in Madras High court, requesting to scrap the demonetization decision. however, the Court refused to intervene in the government’s monetary decision.

Since the past century governments across the world were taking the decisions of demonetization. Though the currency which was demonetized may differ, the objectives largely have remained the same means to remove black money, stop illegal activities, bring currency into the mainstream. The decision of demonetization was taken by keeping the national interests in priority. Though the decision might have caused inconvenience to the general population, it definitely had the national interest and economic growth at its core.

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