Demonitization: Brave move with pros and cons

28 Nov 2016

The world hasnt seen such a move in past and surely its unprecented in Indian History. Narendra Modi has took the fight against black money to the next level with his move to demonitize the 500 and 1000 INR notes. As much as there has been euphoria about the good and bad because of this act, SMEs have their share of impact. Thought of penning what i feel are the pros and cons of the move

  1. Loads of cash is being submitted in bank accounts which has already resulted into lowering of rate of interest for loans
  2. With less cash involved digital money is being used at parking lots by vegetable sellers etc which would have a positive impact on the speed of transactions
  3. All ecommerce platforms which had a large %age of revenue coming from cash on delivery depended on that money hitting the account over 2-4 days. With use of wallets the same would be instantaneous
  4. Obviously with trail of all transactions the corruption would go down
  5. On the flip side, people arent comfortable using the e-models especially in tier 2 and 3 cities and hence the business would have an impact
  6. Industries like Real Estate which had a larger %age of transactions being done in cash will slow down resulting into job loss 
  7. Startups which are either impact directly or indirectly by virtue of being in the industry will struggle to survive as the impact could take months to recover, again resulting into slow down and job loss
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