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 aimed to integrate more of the economy into the formal financial system by diminishing cash usage and augmenting digital transactions and banking. This encouraged savings and curtailed black money.
Statements (A), (B), and (C) accurately characterize demonetisation.
- (A) reflects the objective of a less-cash economy.
- (B) conveys the government's position on black money.
- (C) represents a valid administrative interpretation.
Conversely, (D) is erroneous as it incorrectly asserts that demonetisation discouraged formal savings, which is contrary to its actual purpose.
Final Answer: (D) It led to tax administration channelising savings away from the formal financial system.