Effects of Demonetization
by Finway FSC Empowering People FinanciallyA brazen move by the Government of India took many by an
overwhelming surprise. From the business owners to the homemakers, everyone was
impacted. The category of the impacted citizens gradually increased as the use
of 500 Rs and 1000 Rs note began to fade. Let us enumerate the impacts of
Demonetization.
1. Economic Slowdown: When the
demonetization was announced on the 8th November 2016, the business operators
faced hiccups in the daily operations. The absence of other currencies 100 Rs
and other denominations led to untoward contingencies. This was an exigency
where due to the common man being impacted, even the economy observed a
slowdown. With India being a cash-based economy, it was too sudden for the
citizens to combat this issue cashless.
2. Business slowdown:
The business slowdown acted as the radar for the economic slowdown not just in
the capital, but everywhere in the country. What led to the business becoming
slow was the presence of abundance of cash prior to this move. Small business
owners deal in cash for salaries and other day to day expenses. So to pay the
salaries to the employees who did not have a bank account was a mammoth
task. Besides, small business owners often take payments in cash,
this drive depleted this practice, leading to no immediate resolve and absence
of cash. Those who faced losses had no means but to take a loan against property to make ends meet.
3. Loans: Slash in the property
prices was one thing, but the interest rates too were slashed. Loan against property and
even business loan in Delhi or
countrywide have low-interest rates. More and more people opened bank accounts.
This led to the banks having more capacity to lend. With low-interest rates and
banks giving out loans, the effect was not all that negative.
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Created on Sep 23rd 2019 06:43. Viewed 167 times.