| Demonetization - The Colossal Reformation |

Negative impacts and setbacks are inevitable when implementing a grave decision in a huge economy like India. A nationwide chaos spread on the night when the announcement of withdrawing Rs.500 and Rs.1000 notes was made. This news shook the entire nation and initial perplexity spread among the public on how to succumb to the reality that the notes that people had on hand would lose its validity in a matter of hours. Crowds started to pour in the nearby ATMs to withdraw cash, petrol stations bustled with vehicle owners, normalcy came to a still as the situation worsened in the progressing days. The banned notes were accepted only in banks, certain Government services like Railways, post offices and hospitals.

Although this brave and drastic step has many advantages in the longer run, the ground reality of this cash ban displays the dark side effects of this decision:

1. Lack of Funds: The biggest aftermath being the struggle people had to endure by waiting in queues in front of ATMs and banks for cash. Despite several assurances on the cash circulation by the Government, many banks and ATMs continued to claim cash exhaustion for more than one week. People living in villages and semi - urban areas were the worst affected.

2. Taking advantage: Depositing old notes had the prime condition of showing their source of income. Apparently a minimum of 50% tax was imposed for unexplained deposit of old notes. This was an aggressive step to punish those who had hoarded cash but some reports inform that tax dodgers took this as an advantage providing their illegal banned notes as loans to farmers and poor people. This has tempted the retailers and employers to pay advance salaries in cash and publishing invalidated past sales invoices.

3. Crackdown of black market, not in its entirety: Black money, also referred to the counterfeit notes circulated in the market along with the legal notes published by the RBI, funded for many illegal activities including terrorism to disrupt the economic growth. Demonetization eliminated the black market to a great extent by banning the old notes which were already in circulation, thereby making it void. This has helped a great extent but the fake currency of the new installments has already started to spread, thereby diluting the complete success of demonetization. Hoarding of new notes prevails in the midst of this reformation.

4. Stock Market: With the onset of Demonetization, the stock market witnessed a crippling dip, though only for a short term. General public preferred to save their money rather than investing in the market resulting in the drop of share values. Most of the stocks and commodities except the pharmaceutical sector has been witnessing this dip. Real Estate and Auto sector are affected the most. But rather than pointing at the demonetization, the panic which was created among the investors can be cited as the reason.

5. Impact on GDP Growth: The growth rate of India dipped by 0.6% post Demonetization. Economists feared that India might lose its position as the fastest growing developing economy but India has sustained itself. It is believed that growth rate will rise again, in the long run, but the immediate effects have had unexpected impacts on the GDP.

6. The Struggle of Being "Cash" less: Our economy is majorly based on cash transactions especially in the small scale merchandise trade and agriculture. The root of this system is based on day to day cash dealings which had a huge hit with this cash crunch. Farmers are sourced from the local cooperative banks which are excluded from banned currency deposit which resulted in agricultural trade disruptions, breakage of supply chains which in turn affected the sales and purchase, pricing of goods leading to the wastage of perishables. The loss accrued in production and wastage of vegetables and grains can't be recouped. Retail sector has been going through a bad phase ever since the announcement was made.

7. Adaptation to alternative modes of transacting: Tea vendors, vegetable sellers, auto drivers and several merchants are adapting themselves to other sources of transacting such as paytm, RuPay and debit cards. This is an easy solution to internet users. But in India, quite a huge mass of the population are uneducated and they lack knowledge about the internet, let alone having access to it. Expecting them to shift to a digital mode of transacting may not be a well thought of plan of the Government.

Among the ambiguous premonitions and predictions of the economists, it is still an unclear path ahead. Moving on through this path, it's a test of patience, conviction and time for the billion odd Indians. Is this the beginning of an end or simply a rocky road to a brighter future? Only time will tell.

Wow. Nice initiatives guys. 👏

Appreciation for the efforts taken.

^ Extremely Informative thread on Demonetization by you, CC's! 👏

Good thread..great work putting this all together guys!!

Good too see a topic on Demonetisation ...d current(cy) topic...Good work guys 👏 ...

Good to see an unconventional topic being picked up in the forum. Congrats for the great effort. Esp for keeping the debate balanced with both pros & cons.

WOOOW brillant topic! 😃