Wednesday, December 21, 2016


Temporary benefit or Permanent Damage

The demonetization of high value currency notes has created a huge uproar - both in favour and against the call. Though the initial call was to catch hold of black money (which is within India), there were some additional agenda such as fake currency, etc.

I don't have any stats to prove anything .. and mostly what I see and hear, things seems little odd and don't add up.

At the micro level, there is still chaos... mid-small enterprise and people who's genuine business was running on cash transaction (due to multiple low value activities) ... are facing the heat most... Think of construction, marriage, transportation, daily wage labourers, etc. even if they had an account, they may not have 2000 rupees in their account. And let's assume they had enough to withdraw, the ATMs (which are running dry) provide on Rs 2000 max (that too one note of Rs 2000) ... which is nearly impossible for the people to break .... For them, forget about doing business, they are not able to even fulfil their basic needs (read food). I am hoping that Jan onwards the constraints would be reduced so that impact is bearable. If not, I have issues in the modalities of implementation.

The cashless / digitization (digital money) is still long way to go. Most of the urban class is able to manage, but, it's having heavy impact on the local sabjiwala and chai-wala ... same logic as above.

On a Macro level also, we are talking about few major issues - black (hoarding of currency, which is on the rise right now) ... fake currency - relief for few months perhaps ... terrorism / trafficking / ... any major transaction which was based on cash - again temporary slow down perhaps ... my belief is that, these activities would regain the momentum once the situation is normalized or the cash flow is normalized. If it doesn't, the majority of the public (who is facing he maximum heat) will certainly lose the patience.

Changing rules and norms (a bit too many and too frequent) is adding to the chaos... 

Curbing or limiting the amount of withdrawals or keeping at home (primarily used as safety net) will not go down very easily with public at large. Today, cashlessness has gone to the levels where Banks and ATMs are cashless (which is certainly not good for the common man).

There is lot more to do before we go for a complete cashless (or rather digital economy), curbing large cash transaction or black money transaction ... there is lot more digitization is required. Further, reforms are required on mitigating some of the issues with the needs of the common man because of which people actually go for corruption ... (like Education, healthcare, taxation, etc )

Hoping that the hyped benefits with ref to reduced activities related to terrorism and trafficking ... and many others... is a lasting one .. (alas!) and we have a normalized cash and digitized transaction too... (which also seems a mirage in a desert right now)

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