The night of November 8 was a prelude to a historic event in the economy of India. The words uttered by national Supremo to implement demonetisation and cancel the legal tender of Rs 500 and 1000 struck lightning to more than a billion people of the country. The announcement though was welcomed by many but, simultaneously, traumatised quite a handful. Now, as the stage is set and the decision has been made the discussions whether such a move was necessary and could it really be impactful for changing current situation is happening around every nook and corner. We at Craft Driven have tried to analyse the pros and cons of the same.
Demonetisation Created A Chaos Among The Masses?
No doubt, the decision came as a big surprise as well as a shock to the countrymen but we Indians have that very nature of getting impatient very easily. The view of long queues in front of banks the very next morning showcased the same impatience in our people. Even people with small amount of cash were standing in lines fearing that the little amount they have will be of no use if they didn’t transact it well in time. The whole exercise becomes life-threatening for those who were actually in dire need of money from the banks. The condition of the bank employees was no different and some were really given a pat on the back by the top management for the kind of valour they showed to tackle the crowd.
With the passage of time, the decision which was hailed as a masterstroke by everyone in the beginning; started getting a wrath of the people for its bad execution. Even the Supreme court warned the centre that such torture to the common man can lead to greater repercussions and, thus, the government may find itself in a tough situation if people start retaliating due to great inconvenience they are facing. But, even if we consider these as the after impacts of demonetisation a great move and admit that some pain has to be felt in order to cure the disease, this would be just one side of the story.
Is Demonetisation A Sure Shot Method To Curb Black Money?
Even today many are wondering whether demonetisation will actually curb the flow of black money then very few ponder over the thought as an achievement. Many economists don’t consider it as a long-term solution or strategy for getting black money back into the system. The former RBI governor himself admitted that clever people find ways to route their money into the system again. So, even if after this turning point the situation doesn’t change then the decision will be infecund for the economy.
On the contrary, the move is being considered as a long-term antidote for the economic situation. The common man, even though struggling to get enough cash in hand, is actually praising national Supremo for such a bold move. Many termed it as a masterstroke that will have obvious positive impacts for the country. The move has impacted the counterfeit money that has been circulating in the economy. It will also lessen the liability from RBI’s balance sheet. No doubt, the banking sector will emerge as a strong candidate overhauling the situation further. The CASA accounts of the banks have got a skyrocketed boost with the move. With enough liquidity in hand, the rates are very likely to come down further. The immediate impact can be seen as the major nationalised have reduced the deposit rate within a week of the demonetization decision.
Demonetisation And Era Of Digital Transactions
Further, with the good monsoon and the strong a financial position, the move will create a double whammy effect for the consumers. Even though the situation seems to be tough for the time being but it is going to have positive impacts in the future. Also, the move has created a great awareness among the citizen regarding the digital transactions. The government alleged that it has brought more than 500 million people in the ambit of digital transactions. The emerging start-ups like Paytm, FreeCharge, MobiKwik have seen more than 100% surges in the transaction over last two weeks. The banking apps from the respective banks have seen numerous downloads in past some days. The digital transactions which are easy to realise and monitor will have a great impact on consumers as well as the institutes.
Demonetisations’ After-Effect on Digital Payment Methods:
According to The Hindu, over the past week, digital payments have hit record transactions: PayTM said there was a 200 percent increase in its mobile application downloads and a 250 percent increase in its overall transactions; MobiKwik said its user traffic and merchant queries increased by 200 percent within a few days of government’s announcement. Companies like Oxigen and PayU have also seen a rise in their service usage. All of these, immediate and long-term after-effects of the demonetisation move can result in a great boon for the Indian economy.
We believe that the situation will become better with time. We, Indians, have a habit of fighting hard with any adverse situation and also have a great appetite to absorb big shocks. Whether or not this was a great move, time will only tell. The only thing at this moment is to get patient and pray for things to be normal again. It is always difficult to move a big rock lying on the road but once that is done, then only we can travel the path ahead and for that, we have to make an effort to push it off the cliff.
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