It was on November 8, 2016 that Prime Minister Narendra Modi shook the entire country by dramatically announcing the withdrawal of Rs. 500 and Rs. 1000 notes, that constituted a gigantic 86% of the notes in circulation.
This despite being the third time for India, people felt the impact of demonetisation. What followed next was chaos when serpentine queues in front of banks and ATMs became a common sight! However, notwithstanding the inconvenience it caused the common man, many hailed it as a revolutionary decision to root out black money from the country and make way for a cashless economy.
A year later when initiatives like GST have already taken the limelight away from demonetisation, we at My City Links talk to people from different walks of life to find out the real impact of PM Modi’s ‘surgical strike’ on black money and how life has changed since then.
According to retired senior banker P.K. Pradhan, “Demonetisation was indeed a good decision to curb the black money and terror funding. That was the main intention with which the government decided to scrap the Rs 1000 and Rs. 500 notes. But the impact was not as expected in the sense that whatever circulation was there of Rs 500 and Rs 1000 notes, almost similar amount has come back to the system. Though the good thing is that the money which was not in the banking system for long has come back.”
Speaking further about digitisation of monetary transactions in the country, he explained, “I would say that demonetisation for sure has helped digitisation penetrate into our transaction system. Now, many prefer to make payments through Paytm, card or do online transactions. The downside to digital money is that, while the young ones have quickly adapted to the new technology, the older people are yet to get comfortable with cashless money.”
“The fact that many citizens have now come under the tax bracket, has been among the other benefits of demonetisation. The chances of small and medium traders who have been trying to evade taxes have come down. That apart, financial inclusion has come into the banking system. More money has also been flushed into the banking system. After all, hoarding cash can now be a risky affair as the government can scrap higher denomination notes anytime” added Pradhan.
Swarup Ranjan (Jitu) Mohapatra, Founder, Orimark Properties said, “The step has had a painful impact on my personal business. However, we think it will have a long-term effect and will create a healthy economy for the country. Changes within the system or anything related to changing the scenario is always painful. It would be too early to give an opinion on whether the decision was right or wrong, as it’s been only a year. Demonetisation is a protracted process and there’s a long way to go before it starts to show positive results. We have been used to the traditional system of cash dealings, which we haven’t still gotten over.”
While agreeing with Mohapatra that the process will take a long time to show a positive outcome, Surendra Agarwal, chartered accountant based out of Bhubaneswar told MCL that he is confident that the change will be visible sooner than later. “I am positive about the implementation of demonetisation and its benefits. Currently, the economy is undergoing a temporary phase of slowed down growth. But things will improve. Even digitisation will soon be the preferred mode of transaction as the awareness increases.”
Meanwhile, demonetisation has proved to be a curse for many as well. Gayadhar Swain, secretary of the Vegetable Vendor Association said, “I don’t see any significant change after one year. Instead, the decision has invited more trouble for all. Even though the government is encouraging cashless transaction, it’s not possible in case of a small purchase. Many vegetable vendors have tried to go cashless through Paytm payments but cash is still preferable.”
Ranjit Behera, a shopkeeper at Master Canteen agrees with Swain, saying, “Though the intention of the government was good, I feel it has failed to bring about the expected change. After demonetisation, everything has become expensive and it has made the life of common people difficult.”