Demonetization has been a disaster for the Indian economy. The Prime Minister has not done enough homework before taking that decision. 84% of Indian currency is in form of ₹500 and ₹1000 denomination. While it was announced on 8th November 2016 that the currency notes of the above mentioned denomination will no longer be valid. The government was not ready with new ₹500 and ₹2000 notes. They were not yet printed.
The result was huge ques outside banks and ATMs with all banks and ATMs running out of cash. Again the limit to which the money can be withdrawn per day was kept minuscule so people were made to go to banks and ATMs more frequently than they ever did. There have been over 70 deaths across the country till now when people died for not being able to exchange their money when they were in dire need of it.
It has been 17 days till demonetization took effect but things are at the moment far from normal. Consumption has come down and this has lead to decline in business. Most businesses across the nation are badly affected. 70% of trucks are off the road, decrease in consumption has had a severe effect on the transport sector.
A CMIE (Centre for Monitoring of Indian Economy) report has mentioned that Indian economy is poised to lose ₹128,000 crore in the the 50 day window when the demonetization operation takes place. In the end the article mentions the amount is conservative and it is for the first 50 day period only. There are surely going to be long term devastating effects on the economy.
The foreign tourism industry is destroyed as tourist are only allowed to convert only about $70 per week to Indian currency, which is just peanuts. The foreigners who visit India during this time will have to face lots of hardships and they will never comeback to this country.
Each and every sphere of the economy is badly affected. As much as 400,000 or more jobs will be lost in labour intensive industries. It was expected that the demonetization operation would clean up the black money in the nation, however channels have opened up that is helping people to change their old hoarded black currency into new, thus effectively converting their black money into white for a 30% commission.
There are many more things that are not reported in the media like broken marriages and other hardships faced by common people. The Prime Minister had announced that after 24 th Nov the amount of money that can be withdrawn or exchanged in the banks will go up. On the contrary the amount of exchange per individual has come down to ₹2000 per day and on 24th it was announced that people would no longer be able to exchange old 500 and 1000 notes, they only will be able to deposit them.
Now 47% of Indians don't have bank accounts, most of them are poor people. They would have saved their life long earnings in form of ₹500 and ₹1000 notes, what happens to them?
The entire demonetization operation has rather become a moneylaundring work in which the rich are the ones who are benefited while common people have to go through tremendous hardships. It will paralyze the Indian economy if proper action is not taken by the judiciary, which is now the only hope of the common man.
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