Last night Narendra Modi ji’s step of demonetizing Rs 500 and Rs 1000 note has created chaos among the common man. We realize that, this definitely is going to help our country demolish black money, but the short term based problems that people will have to face overnight has raised the eyebrows. Facing problems are being obvious. Everything under the Sun comes with a price and one has to pay a pay that to achieve that particular thing. The sudden notice of these Rs 500 and Rs 1000 notes having no more use at the stroke of midnight other than depositing in bank has already put sword on people’s head. Long queues in front of the ATM are the very first and basic result this decision of our PM has shown.
This truly is a systematic change in years that took place in our country. Keeping time as the key to it, the announcement was made at 8pm, which means there would be no means left for last minute transaction or any impact on the share market. The masterminds who have betted thousands of crore on US election results the next day, will no more have way to get back their money, as the results will be out by 1 am, and the notes will be worthless from 12am. This masterstroke by our PM, hopefully, will have positive effect on our country’s development, but not overnight. The scale will have an un-uniform graph of growth and withering in the country’s economy.
How is it going to affect the Common Man and the Business.
Business is on every scale related to common man, positively dependant on each other. This decision of Modi ji, will have definitely have impact of the running economy of our country, but in different ways.
A general overview:
People having lots of cashes which are white money, will get them deposited in the bank. The losses stands for those who posses black money, in cashes, because generally transactions of black money are done in hard cold cash. They will either try to get them in banks which they are very much afraid of, or will get them wasted. In a country like India, where corruption and black money weights more than white money, this decision will, though in a slow pace, result in deflation. A change in Indian Economy will not take place overnight. Neither inflation nor deflation will take place overnight.
On a very short-term basis, common consumers will stop purchasing commodities other than groceries. This will have a direct impact on the small scale vendors and businesses who earn hard cash on a daily basis. But, the large scalars will not face any hurdles during this short phase as transaction will be done online.
On a long term basis, due to the decreased use of black money, our economy will suffer deflation for a while. This is because the value of money will suddenly decrease, due to the limited production of notes and the complete abolishment of black money. Every kind of vendors and business, small and large scale, will face this.
This deflation will continue until equilibrium is attained. After a couple of months or a few years, depending on the amount of black money India had to drain off, balance between the value of money and commodities will be achieved.
We cannot know what exactly this huge step of Narendra Modi Ji will result into, but we have already predicted that, though slowly and steadily, we will one day breathe a corruption free India, that it will be a revolutionary transform for our coming generations, that we have a chance to raise our India back to what it was – “Sone Ki Chidiya”.