Demonetisation Opportunities and Challenges| विमुद्रीकरण में चुनौति अवसर

People are certainly baffled as a huge policy like Demonetisation has taken effect in the whole nation.

We are here to examine whether “Demonetisation” is good or bad, but with a larger objective to deliberate the Opportunities and Challenges that are likely to arise as a consequence of demonetisation.


Demonetisation has offered both challenges and
opportunities in the digitisation of the rural economy.

Opportunities
– Increased usage of POS machines leading to wired transactions
– Move towards cashless economy
– More banking penetration will eventually help in direct benefit transfer regime for farm and fertilizer subsidy in future
– digitally literate farmers and labour
– Government can make it mandatory that the APMC payments beyond a minimum threshold be made into bank accounts only
– Resultant financial inclusion will lead to generation of more formal credit and thrash unorganized lending
– new avenues for corporate social responsibilities obligations e.g. companies can arrange for POS machines and training for the same

Challenges
– High level of illiteracy among rural farmers
– lack of banking penetration in remote areas
– Internet connectivity is a major challenge
– Trust issues on digital channels
– Cash crunch has adversely impacted the sowing in Rabi season and harvesting will also face the similar fate due to a low level of sales.

As the effects of demonetisation unfold, it can be seen that the exercise poses opportunities and challenges not only for the government, businesses and individuals, but also for the Indian economy and the fight against black money.


From the stroke of midnight November 8th, notes of rupees 500 & 1000 were no more legal tender making almost 86 percent of cash in the market as mere piece of paper. Although the notes can be exchanged in the banks for a new note of rupees 500 & 2000 or notes of lower denominations. The move was directed to attack-
a) Black money hoarders.
b) Counterfeit currency in circulation, that is estimated to be almost 400 crores.
c) Terror funding.
The demonetisation brought in challenges as well as opportunities for the rural economy.
Challenges:-
1) Sudden move- Created panic among people of rural India.
2) Cash shortage- The limit in transaction put the people standing outside the banks.
3) Agriculture- Being the harvesting season the demonetisation resulted in very less purchase of harvest. Also the sowing is affected as farmers have no money to purchase seeds & fertilizers.
4) Wedding season- Weddings happening in rural areas were affected as they transact in cash.
5)Daily wages- Workers were denied payment because of unavailability of cash.
Opportunities:-
1) Financial Inclusion- Bringing rural people under the umbrella of banking
2) Formalising the informal sectors.
3) Curb exploitation- As paying daily workers via bank account would lead to lesser exploitation.
4) Cashless transactions leads to lesser black money.
Way ahead- Although the move was directed to tackle the above stated problems, it can not stop these problems from reoccurring unless a policy or law is formulated by the government to curb these. For now, demonetisation along with the benami act is going to help India in boosting its economy & the last beneficiary would be rural India.

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