Prime Minister Narendra Modi made a shocking announcement on November 8 that India would not use old notes of Rs 500 and Rs 1,000 after December 30. The government quickly announced that it will bring out new Rs 500 notes, come out with Rs 2,000 notes and supply more Rs 100 notes to meet the cash demand that will emerge. The government pitched that this move was inevitable to clean the menace of black money and corruption. Opposition parties have blamed the government that such an unplanned move will put common people to inconvenience and also banks as they are not prepared with alternative cash supplies. Since making the announcement, the government has been trying to increase cash supplies, but people across the country got in a panic mode and started rushing to bank branches and ATMs to deposit, withdraw and exchange the money with them. This has put a lot of work pressure on bank employees as they are forced to handle more customers than they are used to. The demonetisation move has created opportunities for some sectors while it’s a challenge for some others. The real estate, where construction workers are paid daily wages, has been hit as arranging cash has become a problem and general stores, which usually transact in cash, are forced to either install card machines, give goods on credit to customers or experience a dip in transactions. Banks, on the other hand, have seen a surge in deposits, e-commerce companies are seeing increased transactions and digital payment companies are witnessing unusual traffic than ever.
The demonetisation move of the government has received a lot of praise with people calling it a bold move to attack black money and those hoarding unaccounted money. Modi initiated several steps after he came to power from asking Swiss banks to disclose the names of account holders, who have unaccounted money deposited with them, giving a deadline to people to voluntarily disclose unaccounted funds to the recent demonetisation move. However, some think that the common man, petty businesses, farmers and patients at private hospitals are suffering by this move that was supposed to be targeted at the rich. With several commission-based cash conversions coming to light and people buying yellow metal with stashed cash, the steps taken by the government seem more to put the common man in trouble rather than the wealthy. Experts question the government move, which is just targeting ‘cash’ and ignoring other means of wealth and black money be it property, overseas accounts or other assets in financial or non-financial forms. Unless cash supplies are ensured through the banking system, the common man cannot meet his needs and unless corrupt are tracked, the black money menace cannot be wiped out. The will looks good, execution is what matters now!