Question
What are the disadvantages of demonetisation?

Answer

Disadvantages of demonestiation: Demonestiation is not all beneficial and even proponents of demonetisation acknowledge that it does have its disadvantages. A few of them are outlined below.
  1. Little cash in circulation: Cash crunch is a major disadvantage of demonetisation due to the unavailability of small currency denominations, an issue which makes it difficult to make small purchases.
  2. Inconvenience and annoyance to the public: Sometimes, demonetisation can be very inconvenient. For example, sometimes the government will remove certain denominations of bank notes from circulation but keep others. It can be annoying when smaller coins are removed from circulation and you do not have enough change. Further, queuing up in banks to deposit money or exchange currency can be inconveniencing.
  3. Slowdown in Economic Growth: Economic growth will experience a period of lull due to business disruptions, at least in the short term.
  4. Panic: Not everyone understands the essence of demonetisation and, therefore, such an exercise is likely to result in panic among a section of the population.)
  5. An avenue for fraud and corruption: Some people are likely to take advantage of lapses in the financial system to engage in fraud and corruption when exchanging currencies.
  6. Disruption of Trade: The normal trading activities may be disrupted by this process since it takes time for consumers and suppliers to adjust to the new monetary policy.

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Read the following text carefully and answer the questions given below:
THE FUTURE POPULATIONS OF CHINA AND INDIA
In the absence of catastrophic events such as nuclear war, the populations of India and China are destined to become even larger, and by a large margin. If the Chinese were to achieve a total fertility rate of as low as 1.7 children born per woman by 1990 and maintain fertility that low for 30 years, the population would increase to a maximum of 1.22 X 10 in 2020 about 75% greater than the 700 x 106 it was when the birth rate began its big decline in the mid-1960s. To limit the increase to this amount will require an extraordinary success of the birth planning program.
For many years, 30% of parents would need to have only one child, and 70% only two. If a significant fraction had three or more, the proportion of one-child couples would need to be higher still. The social cost would be substantial. Many children would grow up with no siblings; many in the next generation would have no aunts, uncles, or cousins; very many parents would have no sons, and there would be an age structure with a marked relative shortage of younger workers, males of military age, etc. These features are very foreign to Chinese customs and values; the stringent and allegedly coercive means needed to achieve such low fertility might have adverse political effects as did less draconian measures in India.
In India, the failure to have started a large decline in fertility as early as in China implies a prospective growth on the order of 75% or more of the current population-to a maximum of at least 1.2 x 109, because the current population is nearly the size the Chinese population was when the birth rate in China began its dramatic fall.
The death rate in India is higher than that in China, but the prospective decline in fertility in India is surely more gradual; the attainment of a replacement-level (total fertility rate of about 2.2 or 2.3 children) is long in the future, to say nothing of attainment of lower rates.
The reason for the large continuing increases in population in each country even after fertility is reduced is that population growth has its own momentum. High birth rates in the recent past mean that there will be many more potential parents for another generation than there are now. Even if every couple merely replaces itself, the population continues to increase by 50% or more.
Thus, the world's two largest populations are destined to become much larger. I believe today, as I did when working with Hoover, that if sensible economic policies are followed it will be possible to provide a somewhat better life for these larger populations than is enjoyed in the two countries today. Reducing fertility soon to no higher than needed for long-run replacement would improve the prospects significantly and would especially improve the social and economic future as seen from the perspective of early in the next century. Yet, the mistakes of the past cannot be cancelled; the birth rate cannot be lowered retrospectively. A lower birth rate now is desirable, but the ideal rate is not zero. There are social and political costs of excessive emphasis on the immediate achievement of very small families; the rights and sensibilities of the current population and the disequilibrating effects of drastic changes in age composition must enter the calculation of desirable population policies.
Questions:
i. Outline any two implications (apart from population arrest) of the one-child policy of China introduced in the late 1970s.
ii. Delineate the reasons why the world's two largest populations are destined to become much larger in the future?