How Demonetization Affected The Business

How Demonetization Affected The Business

Demonetization, the eminent and the often word we would have continuously heard in the past two years. On Nov 8, 2016, suddenly our prime minister of India Mr. NarendraModi announced that old 500 and 1000 rupee notes were not valid. Though it was a great and amazing step, it failed due to many reasons. The government did not take any actions to tackle the negatives and they did not print the new currency notes to issue in the public market. That is the main reason for its failure. Because of this, almost all the poor and rich people suffered a lot as they were not able to withdraw money from the nearby ATMs.

The unexpected demonetization affected the businessmen badly as no customers were ready with the fund to have dealings with them. The ATMs in all the cities and villages were running out of cash and the banks were filled up with the crowd to withdraw and deposit their old currencies.

The impacts of demonetization in business are discussed in brief in this post.

  1. Loan demand:

The loan demand on banks got increased as the businessmen were down with no money in hand.

  1. Liquidity:

Liquidity was the major impact because the companies running with a large amount of fund did not able to run their organizations since they were invalid.

  1. Interest rate:

The money lenders increased their interest rates for the cash they lent to the borrowers and the businessmen were the main sufferers and some landlords shut down their companies due to the higher interest rates.

According to the survey it was found that the smaller businesses faced a lot of issues than the bigger ones since the poor businessmen did not find any other way to run their personal lives.

I could say demonetization is a stunning idea but the way it happened was not proper. Demonetisation is only to dodge black money corruption.

Do you agree black money was entirely wiped?

Not at all. Still, the politicians and many people are corrupting this nation with black money. In foreign countries too, demonetization happens but they do it the right way which predominantly helps the common people.

The higher valued currencies get banned and they print new lower valued currencies in the main reserve banks.

But here in India, lower valued currencies like 500 and 1000s were stopped and 2000 was introduced and this is really a waste one as still, the corruption is going on in the country by the same set of political people without any change.