The effects of demonetization

There has been a lot of talk at the long queues at banks and ATMs that demonetization is going to bring in the age of plastic money and the economy is going to see a resurgence. The point that we as lay men must understand is that demonetization has netted in close to Rs. 10 lakh crore for the exchequer.

With a 7 percent growth rate we can envisage that with more money coming in, our Crisil rating is going to go up. The economic forecast is buoyant and swipe machines have started replacing over the counter transactions.

The concept of keeping money at home is what Prime Minister Modi was against and this move is certainly going to stop hoarders from keeping stacks of cash at home. The shake-up is going to lead to an economic cleanup and real estate transactions are expected to be more transparent now. The sector is thriving on a 40:60 (black to white) ratio today. This move is certainly going to bring about a correction here. Real estate pundits are speculating that property prices which are now highly inflated will see the corrections. Certainly good times for potential buyers.
The larger picture is e-wallets are going to be the future and e-commerce the gateway to that future. Names like Paytm and Book a Cab are going to be our daily financial planners.

Well yes, Goldman Sachs and Credit Suisse will certainly look at pushing in dollars into the economy that will move forward. Financial pundits are predicting interest rate cuts and FD rates coming down. Globally though FDs are not considered the best saving option, Obviously mutual funds and other instruments will become sought after. Playing the markets will be the norm and sectors like retail and auto will bloom.

It won’t be long before we see a 9 percent growth. This rationing exercise by banks is due to one simple fact – that printing of millions of notes is taking time. The system will get regulated once the ATMs are up and running. A month or two more of discomfort and we will be on a roll. Rest assured the merits of demonetization far outnumber its pitfalls.

Author – Diniar Patel
Managing Editor (Innovations) & Resident Editor (Supplements, Maharashtra) at The Times of India Pune.
Corporate panelist at PIBM, Pune

No comments:

Post a Comment