MONEY – APART OF LIFE
Money is a fascinating subject and full of curiosities. It is important to capture this element for the students. The history of money and how various forms were used at different times is an interesting story. At this stage, the purpose is to allow students to realise the social situation in which these forms were used. Modern forms of money are linked to the banking system. This is the central idea of the first part of the chapter.
The present situation in India, where newer forms of money are slowly spreading with computerisation of the banking system, offers many opportunities to students to explore on their own. We need not get into a formal discussion of the ‘functions of money’ but let it come up as questions. There are certain areas that are not covered, such as ‘creation of money’ (money multiplier) or the backing of the modern system that may be discussed if you desire.
As you would see in the chapter, the stock of money consists of currency held by the public and the demand deposits that they hold with the banks. This is the money that people can use as they wish and the government has to ensure that the system works smoothly. What would happen when the government declares that some of the currency notes used by people would be made invalid and would be replaced by new currency? In India, during November 2016, currency notes in the denomination of Rs. 500 and Rs. 1,000 were declared invalid. People were asked to surrender these notes to the bank by a specific period and receive new Rs. 500, Rs. 2,000 or other currency notes. This is known as ‘demonetisation’. Since then, people were also encouraged to use their bank deposits rather than cash for transactions. Hence, digital transactions started by using bank-to-bank transfer through the internet or mobile phones, cheques, ATM cards, credit cards, and Point of Sale (POS) swipe machines at shops. This is promoted to reduce the requirement of cash for transactions and also control corruption. Students could be asked to debate on the process and the impact of demonetisation. They can be guided to make a collage of the major areas where people use digital and cash transactions which are legitimate and legal. They can also discuss the transactions which are legal and why. It is also important to intimate students that different types of plastic cards are used in place of cash transactions but not all of them money per se.
Credit is a crucial element in economic life and it is, therefore, important to first understand this in a conceptual manner. What are the aspects that one looks at in any credit arrangement and how this affects people is the main focus of the second part of the chapter. The world around us offers a tremendous variety of such arrangements and it would be ideal to explain these aspects of credit from situations that are familiar to your students. The other crucial issue of credit is its availability to all, especially the poor, and on reasonable terms. We need to emphasise that this is a right of the people and without which a large section of them would be kept out of the development process. There are many innovative interventions, such as that of Grameen Bank, of which students may be made familiar with but it is important to realise that we don’t have answers to all questions. We need to find new ways and this is one of the social challenges that developing countries face.
Source: This topic is taken from NCERT TEXTBOOK