Families who have weddings this season are managing without cash in times where vendors refuse to accept payments in cheque or epayments.The impact of demonetisation has been seen across the society in the day-to-day life of the citizens. Almost every individual has had futile attempts at withdrawing cash from banks and ATMs and daily life has been massively hit. Troubles have increased especially for middle class households and lower income families that do not have much cash deposits in their homes to manage without cash. Also, thousands of families are also struggling in this wedding season without having cash in hand to manage the expenses.
Serpentine queues are seen outside banks daily. People camp outside ATMs throughout the day waiting for the cash van to arrive, but to no avail. Wholesale markets are running largely on credit as small retailers don’t have much cash to by products. Similarly, for many people easy daily tasks like grocery shopping has also become a daunting affair with cash becoming more precious than ever.The wedding market has also been hit hard. Families who have weddings this season are managing without cash in times where vendors refuse to accept payments in cheque or epayments. People don’t have money for rituals like ‘shagun’ and envelopes marked ‘I O U’ have gained popularity as a desperate move.
Taking note of the serpentine queues and misery of the common man, the government decided to increase withdrawal limits to Rs 2,500 from ATMs and Rs 4,500 over the counter. This move may not ease up the crisis. Even the increase in weekly withdrawal limit of Rs 24,000 seems insufficient for those who desperately need cash in hand to manage affairs where cheque payments and online payments are not a feasible option. The inflow of cash into the financial system has not been as swift as the public would’ve liked.
Liquidity has decreased massively as 86 per cent value of the currency in circulation were rendered null and void. However, slowly, new currency is replenishing the system and the liquidity is slowly on the way back to favourable levels. The government has introduced Rs 2,000 and now even Rs 500 notes in some places. Concurrently, multiple raids have been carried out by the income tax departments across the country to recover thousands of crores of rupees in black money.
The plan for demonetisation had been on for the last 10 months, so one would expect that the government would have a solid plan in place to infuse sufficient amount of Rs 100 notes into the system as soon as the demonetisation took place. Filling of ATMs has also been seen to be a once-a-day affair and many feel the frequency for filling must be increased. Since the DEA Secretary Shaktikanta Das said on Monday that sufficient cash for replenishment was already available with the government, it is expected things will move much faster now.
The demonetisation move in effect is net profit and beneficial for the government and in the long term for the economy as well. Increased tax revenue will boost the government’s finances, reduces deficit, dig out dirty money, stop terror funding, squeeze out hoarders and introduce currency that is more difficult to counterfeit.
Prime Minister Narendra Modi’s move was part of his long running campaign against black money. In the week following the announcement, at least Rs 3 lakh crore worth of currency in Rs 500 and Rs 1,000 notes have been deposited in the banks.