ESSAY ON THE EFFECT OF DEMONETIZATION ON THE MONTHLY EXPENDITURE ON YOUR FAMILY
Answers
Recent move by the government on demonetization of high valued currency notes though has long terms economic and social benefits, it has hit various sectors hardly. Unorganized sector is the most affected of all and more than 90% of workforce is placed in unorganized sector worsens the scenario.
1) Cash economy – Most of the transactions in this sector happens through cash, some even daily wages. Sudden liquidity crunch hit both employers and employers on merchandise and wages respectively
2) Bank and digital literacy- Most of the employers in the unorganized sector are illiterate; they are not tech-savvy and may not be completely aware of banking procedures. Also many unorganized jobs are in rural areas gives them less access t banks and ATMs
3) Future trade flow - No cash made them impossible to carry on buying products for next cycle of selling. This could be clearly evidenced in agriculture sector, where farmers are not able to buy seeds, fertilizers for rabi cycle.
However, the steps taken by government to ease the effects of demonetization would help to reduce the inconvenience.
1) Withdrawal of money at selected petrol pumps
2) Extension of crop insurance premium
3) Admitting registered traders to withdraw upto 50,000 at mandis per week
And, in the long run, expansion of the banks, ATMS, Business correspondents, bank and digital literacy should be strengthened.
Demonetization is indeed a great move when seen from a holistic angle in terms of fake money, black money, terror financing and long term economic gains, but inconvenience experienced by the people in the unorganized sector should be reduced as they occupy strong base of the economy.