Question

Which of the following is NOT a feature of demonetisation ?

• A. It leads to creation of a less-cash or cash-less (free) economy i.e. channeling more savings through the formal financial system and improving tax compliance.
• B. It is interpreted as a shift on the part of the government indicating that tax evasion will no longer be tolerated or accepted.
• C. It is viewed as a tax administration measure.
• D. It led to tax administration channelising savings away from the formal financial system.

Hint:

Demonetisation was aimed at formalising the economy, not distancing it from the financial system.

Answer 1

The Correct Option is D

Demonetisation was undertaken to bring more of the economy into the formal financial system, by reducing the use of cash and increasing the use of digital transactions and banking. This promoted savings and reduced black money.
Options (A), (B), and (C) are all correct descriptions of demonetisation.
- (A) describes the goal of a less-cash economy.
- (B) signals government’s stance on black money.
- (C) is a correct administrative interpretation.
However, (D) is incorrect because it falsely claims demonetisation discouraged formal savings, which is opposite to the actual intention.
Final Answer: (D) It led to tax administration channelising savings away from the formal financial system.