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It is more than four months since the government started the demonetization process on 08th November 2016. The process had the withdrawal of Rupees 500 and Rupees 1000 notes to be replaced by fresh notes of Rupees 500 and Rupees 2000 denomination. This process no doubt had some teething troubles in being implemented but in the end despite all the difficulties and problems faced by those affected the process was completed by the Government of India. The government had to face lot of trouble from the opposition parties more than from the people. Majority of the people seemed to support but in a successful democracy there is always room for dissent and difference of opinion which was respected and appreciated by those who were supporting demonetization.
Once the process was completed new notes introduced and started flooding the economy the queues at the banks and the ATM’s reduced and things came back to normal. It was a revolutionary exercise which was carried out by the government and the banking services and the bank employees was stretched to the limit and they rose to the occasion well and delivered. Full credit to the employees for the great job they did. Later new instruments like e payment systems, e wallets, online banking systems, credit cards, debit cards, shopping vouchers, cheque facilities, payment and receipt of monies and shopping through mobile and virtual money systems were introduced and accountability bought among the people to keep a record of where the money is coming from and where the money is going. This step is one of the steps to check black marketing, hawala and other such businesses which thrive alongside the main industries and business.
Benefits were given to people to use these systems and the charges on the usage were waived and media was used to advertise how to use the different modes of payments and the benefits which accrued to the people due to this. The people were clearly explained the need for changing the system and the advantages which would accrue to the country and to the people. Despite the opposition and a section of the population differing in their view this process was finished.
What I find today is the people have accepted the change largely and are carrying on with their lives. There were elections in some states in the North India and the ruling party and the opposition both used it as a referendum for and against this process which was carried out. The ruling party in the government went to the public seeking votes and ensure that the government party, the Bharatiya Janata Party win the elections on this particular issue. This was mainly the case in the state of Uttar Pradesh which has the largest number of constituencies and the old government of Akhilesh Yadav which was ruling lost the elections badly. The people cast their ballot and gave their verdict.
The government treats this as a referendum and since the public mandate was in favor of the government in majority of the states where the elections took place, the government says that people were with the government in this particular economic process. This same view was echoed in many newspapers and magazines and also the internet and electronic media. Now the next revolution which has to take place is what is it that can be expected economically for the country and its people through this process of demonetization which took place. What are the changes which one will see in the foreseeable future. The same is listed below.
According to the government it wanted people to stop using more paper money and go for the alternatives mentioned above which the government suggested to the people. People having been made aware of the concept of paperless transactions are using facilities like credit and debit cards, e wallets, pay TM, gift cards, shopping vouchers, cheques and similar facilities more than compared to what their usage was before. Many of the people have also understood the benefits which accrue from using the new set of payment instruments suggested. Now that the process of usage has started it is to be seen how fast majority of the people shift to this process at the earliest. Now that the changes have been effected the sooner they complete this process the better it is for both the people and the country as a whole.
What happens when this happens in a large scale when majority of people use these systems is that there will be less queues seen at places where payments have to be made or received. For example bill payment, receipt of taxes of various kinds, challan, payments to government treasury departments, transaction in various banks and many other such things will become cashless. This inturn will result in removal of middlemen who used to take their cut for the services they provided. This also used to result in bribery which will be possible no more. Contractors and builders have to apply for tenders online as there is no interaction between anyone the best bidder will succeed in winning the bid and bag the contract. The amount of transactions which are cashless when they increase will result in reducing the cost of the transactions to the public, faster service, service from the place where they reside and online bills and receipts and other such facilities.
The banks and the governments will earn revenue from service providers who will pay them for giving them a chance to provide the service and make money. The people are also not burdened with taxes. The revenue so generated and saved can be used by the banks to improve the services to the public and the governments can use the funds generated and plough them back for the development of the economy. This will take some time but will catch pace very soon. One more advantage will be the average citizen of the country will be well conversant in using different tools and technology provided by the government for their benefit in a few years.
All this will reduce the time taken for a transaction to take place from the point of sale to reaching the customer or vice versa. This will lead to faster turnover and increase the Gross Domestic Product GDP as it increases various revenue streams to all parties. The final result will be that the country will grow strong both economically and technologically which is the need of the hour.
The future looks bright if the country follows the path it has set on without hampering the process started and sees that things reach to a logical conclusion. There are elections again in the year 2019. Political parties should not survive for winning elections and get elected to the houses of the parliament. Whichever the party which wins has to see that the reforms started by the present government have to be continued and the benefits have to accrue to the common man and the country.
The people will also be watching and observing carefully as to who is doing what and will vote accordingly. Therefore no party whether ruling or opposition can afford to take the people of the country for granted. Government has to ensure that it will achieve the objectives of the process which it started by the year 2019 when it goes to the people to seek votes again during the Lok Sabha elections and state elections in many states. Hope political parties behave responsibly and see that whatever is done for the people with all the right intentions reaches and benefits the poor and common of the country who has made it possible for the revolutionary change to take place. What is your take on demonetization as an economic measure for any country? Share your views in the comments section.
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Indeed, Demonetization, inspite of some of the drawbacks in the way it was implemented has been successful in making more people into cashless economy. Many people, especially older ones used debit cards for the first time.
I have used one of the Mobile Wallets to pay to local vegetable groceries, Autowallahs, book stationers etc, and the best advantage of being cashless is that one does not have to worry about change of Rs.1, 5, 10 etc.
Moreover, one can directly get amount transfered to their bank accounts. RBI has to print lesser notes thus checking inflation, and Government's debt too reduces.
Still, a lot of people have switched back to cash for smaller transactions, and this has to be somehow addressed.
But this is not bad as such, because even in Western countries, especially UK, US etc, smaller transcations are in cash.
Yet, it is good if larger transactions are done electronically to check misuse of funds, especially in Government sponsored schemes, Defence and Infrastructure payments, as you have mentioned.
Black money too gets reduced.
Overall, a big plus for India, but Government needs to be vigilant, because those used to big amounts of black money will try to defame Government and mislead people in different ways.