Describe the effects faces by common people due to demonetizing recently
Answers
Answered by
1
When liquidity shortage strikes, it is consumption that is going to be adversely affected first which lead to several others affecting the daily life of people.
Consumption ↓→ Production ↓→ Employment ↓→ Growth ↓→ Tax revenue ↓
As expected, the poorest people and the economically weaker sections of society yet again emerged as the main sufferers. It will take at least 6 to 9 months to replace and re-print almost 15 lakh crore rupees worth of currency notes.

Among India’s middle class, Modi’s “surgical strike on black money” still appears to be popular. It’s the old “vegan fallacy” -- if something tastes terrible, it must be good for you. Enough Indians are suffering that they believe it must be in a greater cause.
It’s a moral project, not an economic one. Stand in line, we’re told, and you honor our brave soldiers at the border.
Some of the common problems demonetization created are
The worst hit are those who are not on plastic money and have to take care of urgent medical expenditure.
Traders, taxi operators and the tourism sector have been hit hard. Horticulturists from Himachal were suffering as their produce was not been sold in fruit and vegetable markets.Textile industry,
The people having marriages in their families have been allowed cash withdrawal of Rs 2.5 lakh. Even for that amount a lot of riders have been added. Many are not getting 2.5 lakhs due to shortage of currency.
Pensioners are going through a harrowing time and long ques have taken many lives already. Even senior citizens whose pension is directly linked to bank accounts are facing hassles.
Private hospitals and chemists are not accepting old notes nor extending credit. The Rs 4,000 limit that has been imposed on withdrawals from banks mean it is a hand-to-mouth existence for many who are already in trouble.
Manual laborers and daily wage workers are unemployed as their employer lacks money to pay them in cash(online is not sufficiant).
Near panic in local markets. Number of transactions drop.
The people in rural areas and the farmers are also facing a great deal of hardship. Many of them do not have bank accounts or own a debit/credit card. The concept of internet banking is far removed for them. These people may be induced to rise in revolt. Already the case of looting of a fair price shop by the public in Madhya Pradesh has been reported.
Deep Deflation. The amount of money in circulation will drop dramatically while supply of goods will remain stable - hence prices of goods will drop. Gold prices, stock prices, commodity prices will drop.
The public is inconvenienced because they don’t have the cash with which to buy daily necessities.
Foreign tourists who have withdrawn money after landing in India are among the worst hit. Instead of enjoying the sights and sounds of India, they are scampering around in an alien land, trying to secure legal currency. Incredible India indeed. The negative feedback to the tourist industry which will affect its reputation.
With less potential buyers in the market and fewer people having white money, the demand for the land goes down and drives down its price. (As people get black money in the future, they will be afraid of holding on to cash and would want to convert that right away into other assets, such as land and gold. This increased demand for land holding, as a form of store of value, might drive property prices higher in the future.)
The trader class, is affected given that most wholesale shopkeepers choose to keep liquid cash to buy material every day. Very few of them deposit money in a bank. Many of them have incurred losses because of the liquidity drying up in the market.
More than a quarter of a billion people in India do not have access to the formal banking sector, which means that a cashless society would be truly perilous.
Cores of working hours gone waste. Everything is in a frozen mode.
Consumption ↓→ Production ↓→ Employment ↓→ Growth ↓→ Tax revenue ↓
As expected, the poorest people and the economically weaker sections of society yet again emerged as the main sufferers. It will take at least 6 to 9 months to replace and re-print almost 15 lakh crore rupees worth of currency notes.

Among India’s middle class, Modi’s “surgical strike on black money” still appears to be popular. It’s the old “vegan fallacy” -- if something tastes terrible, it must be good for you. Enough Indians are suffering that they believe it must be in a greater cause.
It’s a moral project, not an economic one. Stand in line, we’re told, and you honor our brave soldiers at the border.
Some of the common problems demonetization created are
The worst hit are those who are not on plastic money and have to take care of urgent medical expenditure.
Traders, taxi operators and the tourism sector have been hit hard. Horticulturists from Himachal were suffering as their produce was not been sold in fruit and vegetable markets.Textile industry,
The people having marriages in their families have been allowed cash withdrawal of Rs 2.5 lakh. Even for that amount a lot of riders have been added. Many are not getting 2.5 lakhs due to shortage of currency.
Pensioners are going through a harrowing time and long ques have taken many lives already. Even senior citizens whose pension is directly linked to bank accounts are facing hassles.
Private hospitals and chemists are not accepting old notes nor extending credit. The Rs 4,000 limit that has been imposed on withdrawals from banks mean it is a hand-to-mouth existence for many who are already in trouble.
Manual laborers and daily wage workers are unemployed as their employer lacks money to pay them in cash(online is not sufficiant).
Near panic in local markets. Number of transactions drop.
The people in rural areas and the farmers are also facing a great deal of hardship. Many of them do not have bank accounts or own a debit/credit card. The concept of internet banking is far removed for them. These people may be induced to rise in revolt. Already the case of looting of a fair price shop by the public in Madhya Pradesh has been reported.
Deep Deflation. The amount of money in circulation will drop dramatically while supply of goods will remain stable - hence prices of goods will drop. Gold prices, stock prices, commodity prices will drop.
The public is inconvenienced because they don’t have the cash with which to buy daily necessities.
Foreign tourists who have withdrawn money after landing in India are among the worst hit. Instead of enjoying the sights and sounds of India, they are scampering around in an alien land, trying to secure legal currency. Incredible India indeed. The negative feedback to the tourist industry which will affect its reputation.
With less potential buyers in the market and fewer people having white money, the demand for the land goes down and drives down its price. (As people get black money in the future, they will be afraid of holding on to cash and would want to convert that right away into other assets, such as land and gold. This increased demand for land holding, as a form of store of value, might drive property prices higher in the future.)
The trader class, is affected given that most wholesale shopkeepers choose to keep liquid cash to buy material every day. Very few of them deposit money in a bank. Many of them have incurred losses because of the liquidity drying up in the market.
More than a quarter of a billion people in India do not have access to the formal banking sector, which means that a cashless society would be truly perilous.
Cores of working hours gone waste. Everything is in a frozen mode.
Similar questions