Business Mantra News
Demonetization drive banning Rs.1000/- & Rs.500/- notes on 08/11/2016 and cash withdrawal restrictions thereafter from Current & Savings Accounts has affected the economy across all sectors.
From the general goods, grocery traders to high value luxury car dealers, all are witnessing heavy decline in their sales. Be it home care products, personal care products, other FMCG goods, gifts, electronic items, furniture, tourism sector, automobile products, everywhere negative trend has been seen in the last month for traders. In the coming months same will be witnessed in manufacturing sectors also.
One month has passed and if the same situation continues for another 2-3 months then the loans and limits of many traders, SME units may slip to NPA which may give rise to a situation of “Economic Paralysis” in the country.
Probably Prime Minister had thought of all this, before taking such an extreme step. Whole India is standing in queue in front of banks & ATMs. This step was taken due to a few people holding huge black-money. These black-money holders are successfully finding ways and means to convert their old currency into new notes by spending 20-30% of their cash holdings. But people with genuine and legitimate savings have to face long queues to deposit their money and to get new currency from banks. People are not getting 10% of their deposited money from Banks even after 3-4 visits.
Apart from this the businesses are also suffering. This means that genuine people are suffering endlessly, whereas black-money holders have converted their black-money again from old notes to new currency with some cost no doubt.
Is the step of demonetization worth it? If the end result is not achieved, the whole economy is likely to come to a standstill.
If immediate steps are not initiated to improve this situation, the country may be pushed to recession leading to another grave situation.