Demonetisation: The Dubious Devil, or a Blessing in Disguise?
4 years ago, a nation was hurled into an adventure hitherto unheard of in any major democracy; a journey that no one signed up for, but everyone went through. Here's a story based on facts and data.
8th November 2016, 8 pm: An announcement was made that rattled our population. Overnight, Rs. 500 and Rs. 1,000 currency notes lost their legal value.
Just like that - at the word of our Supreme Leader - 86% of the total legal tender in circulation was illegal.
But, what prompted our Prime Minister to take such a bold step?
A promise was made in the 2014 elections to remove all the black money from the Indian economy. To do so, our leader deemed fit to execute a surgical strike on currency notes.
But things didn't go exactly as planned, did they? There were some failures. There were some unexpected successes too.
According to a report by RBI, in 2018, 99.3% of the demonetised notes (i.e. Rs. 15.30 lakh crore of the Rs. 15.41 lakh crore) had been deposited back into the banking system. Thus, the Government’s intention to remove black money fell on its face.
Due to the sudden ban on high-value currency notes, people all over India faced problems in day to day transactions, and businesses were affected drastically. Especially the smaller ones.
There was an increase in unemployment levels, a fall in the industrial output, and a fall in the GDP growth rate in the upcoming quarters.
But, every coin has two sides. Any decision taken, be it good or bad, make us who we are. And we have to live with those decisions. No matter what.
Thankfully, demonetisation proved to be the “Ahaa” moment for India’s Digital Payments (and banking) landscape.
Apps like PayTM became a necessity.
During, and after, demonetisation, there was a surge in online transactions on all kinds of payment platforms. UPI, mobile wallet, NEFT, RTGS, ECS, you name it!
Demonetisation also proved to be a blessing in disguise for Fintech start-ups in India (read more about Fintechs here). More than 750 Fintech startups were set up from 2016 to 2018 (PwC-Startupbootcamp Report).
Investments in FIntech also saw a boost. Check this out:
Though demonetisation may not have served the intended purposes, it has ushered us into a digitally advanced future. With new technologies evolving at breakneck speed, our digital ecosystem is in for a major overhaul.
What’s your view? Was demonetisation good or bad?
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By: Pranav Agarwal