DEMONETIZATION

¨The lack of money, the root of all evil ¨- Mark Twain

´De´monetization was the root of evil for India for a period. It was more like an unleashed wind which destroyed many families in India and within overnight, they were pulled down to roads. The government of India declared on 5th of November 2016 that notes of 1000 and 500 rupees are invalid.

Demonetization effected the economy in short term. India major sector like economic sector, MSME sector affected the most.

On a survey made Surat alone, 89000 power looms were sold as scrap and it led to a loss of 31,000 jobs. There was a countless example from big markets to industrial clusters that were affected by demonetization.

Not only it affected the industrialist it also affected the common people, Demonetization was announced in the evening around 7 pm, when most of the people were working in office particularly in IT sectors and many of them were not allowed to take any gadgets inside the room were they were working, I being one of them had no idea about it and when the office gets over we all came to know that the notes had been banned. That news was good enough to put any common man in trouble who do not stay in their own home and had to buy food every day. ATM by that time was already filled with 100 people and many a time after standing for an hour or two that used to listen that ATM is done with the money. Unfortunately many in spite of having money had starved for 1-2 days because of lack of money.

The biggest disadvantage of demonetization was once peopled get to know about it raised a frenzy and chaotic environment everywhere. The public wants to get rid of demonetized notes which sometimes had let to law and order problem.

Many Indian housewives store money secretly so that they could be of help during times of financial crisis. So due to demonetization, the accumulated wealth is of no use until and unless they are exchanged in banks.

As cash is the most preferred medium of transaction and fewer people use banking system in India. Their immediate anger shifted to mismanaged banks and unprepared banking system. The banks couldn't provide enough newly designed banknotes of 500 and 2000 to substitute the canceled notes. The people have taken in conserving whatever cash they have in their hand.

Trade across all aspects of the economy has interrupted and sectors like agriculture, fishing, and huge informal sectors were almost shut down almost in initial days of the announcement.

Unbaked and informal economy had a hard hit.

Even there was a much lower GDP growth with compare to previous years. There was a growing demand for which there was not enough supply. Indians preferably goes to normal shops who doesnot have an ATM use machine neither the poor people had any idea about what ATM is all about. Taking this golden opportunity China came into play. They were reaching Indian customers with better price and better and innovative goods. Chinese were importing at the cost of Indian jobs.

Though demonetization was done to get off the black money in the Indian market and with a good motive it had adverse effects on Indian economy and Indians. It was moved by the government for long-term benefits for its people overlooking the short term mismanagement by the banks. It was also an added cost and a big challenge for the government of India to produce 500 and 2000 rupees new note within a short time.

Demonetization was a great move weekend by bad execution.