Grade 9
Comprehension Passage
Read the passage given below: 10
1. Demonetization refers to an economic policy where a certain currency unit ceases to
be used as a legal tender. It occurs whenever there is a change in the national
currency. The existing form or forms of money is pulled from circulation and retired,
to be replaced with new notes or coins. Sometimes, a country completely replaces
the old currency with a new currency.
2. On 8 November 2016, the Indian government decided to demonetise the 500 and
1000 rupee notes, the two biggest denominations in its currency system. These
notes accounted for 86% of the country’s circulating cash. With little warning, India’s
Prime Minister Narendra Modi announced to the citizens that these notes would be
rendered immediately ineffective with immediate effect. People were given time till
the end of the year to deposit or exchange them for newly introduced 2000 rupee
and 500 rupee notes.
3. The government’s goal was to combat India’s thriving underground economy on
several fronts: eradicate counterfeit currency, fight tax evasion (only 1% of the
population pays taxes), eliminate black money accumulated from money laundering
and terrorist financing activities, and promote a cashless economy. Individuals and
entities with huge sums of black money acquired from parallel cash systems were
forced to take their large denomination notes to a bank, and account for them
satisfactorily, and submit proof of tax paid. If the owner could not provide proof of
making any tax payments on the cash, a penalty of 200% on the tax due was
imposed.
4. Demonetization had a severe impact on the gold market. The extraordinary demand
for the yellow metal made a stiff hike in the cost. However, the Government made it
mandatory that every buyer had to submit his/her PAN card details for purchases
made. Erring jewellers were brought to book.
5. Many Indians switched to alternative payment methods. The biggest gainers were
mobile wallet companies that offered easy transactions through a large network of
partners. Alibaba-backed Paytm saw a sevenfold increase in overall traffic. Prepaid
cash cards were another option that the customers found useful. Other alternatives
were mobile payment systems linked to e-commerce businesses like Ola Money,
FreeCharge, Flipkart Wallet.
Answer the questions given below :
i. Based on your understanding of the passage, choose the primary objectives of
demonetization 1
a) Eradicate counterfeit currency, fight tax evasion, promote a cashless economy
b) Promote tax evasion, encourage black money accumulation, reduce
government revenue
c) Increase the circulation of high-denomination notes, combat inflation,
discourage digital transactions
d) Promote parallel cash systems, increase the demand for gold, encourage
money laundering
ii. Select the penalty imposed on individuals and entities who could not provide proof of
tax payments on the demonetized cash. 1
a) 50% of the tax due
b) 100% of the tax due
c) 150% of the tax due
d) 200% of the tax due
iii. Explain the impact of demonetization on India's economy in 2016, as described
in the passage?
Ans - The impact of demonetization on India’s economy in 2016 had a severe impact on
the gold market. The extraordinary demand for the yellow metal made a stiff hike in the
cost. The government made it mandatory that every buyer had to submit his/her PAN
card details for purchases made.
iv. Complete the following analogy correctly with a word from Paragraph 4. 1
awful : dreadful:: serious: _severe____
(Clue: Just like, awful is a synonym of dreadful, similarly serious is a synonym of...)
v. List any two points in which the Indian Government strives to combat the 1
Underground economy.
Ans - eradicate counterfeit currency,
eliminate black money accumulated from money laundering
vi. Which of the following is not a mobile wallet company? 1
a) Freecharge
b) Ola Money
c) Paytm
d) Samsung
vii. Substitute the word ‘combat’ with one word similar in meaning in the following
sentence from Paragraph 3. 1
The government’s goal was to combat Indians' thriving underground economy.
Ans - FIGHT
viii. Which sectors of the economy benefited from demonetization, and how did they
adapt to the changes in the payment system?
Ans – so the Alibaba-backed Paytm saw a sevenfold increase in overall traffic and
prepaid cash cards were another option that the customers found useful
