Demonetization and Indian Digital Economy
Wednesday, 9 November 2016 was a day that was marked into the history books, not just for India but also the world. Two Indian currency notes of ₹ 500 and ₹ 1,000 were taken out of circulation as of 8 PM. The world stood still and took notice in amaze and wide open mouths, thinking, what is the country up to? How would a country of 1.25 billion manage such a task? Will the country remain or just wash off the map due an economic challenge.
Fortunately, none of the worst fears of the world came true, but what came out of it was the show of will, the show of unity, the show of peaceful change and transition of an economy that no one dared to speak about but everyone in the world knew existed. The parallel economy that was and to an extent still is as big as the accounted economy of India. The people stood shoulder to shoulder in support of the Government of India. Yes, some complained and still do. Yes, some got hurt and also yes, some were sceptical if the change would indeed take place or not.
Demonetization was bought into play with several reasons, the biggest being the sucker punch to black economy. Again, there are various testimonies if it actually worked or not. The second reason being was to integrate the informal economy into the formal economy. Let’s get into that. Let us see what has changed at the ground level, at a level that affects us the common folk.
One thing is for sure, everything said and done Black Economy still remains, without a doubt. Those who thought that this one step would break the backs of tax evaders would even believe in unicorns. It has made a huge impact in bringing the informal economy into the formal economy as well, however this is a point of much debate and will continue to be a point of debate as the GOI plans further such steps in the coming future.
What demonetization did do was to plant a seed into the minds of people that the power of the Constitution of India is strong, alive and breathing, those who thought the regulators were in deep slumber knowing all, have been jolted wide awake from THEIR slumber. Those who blatantly with complete confidence duped the system have been warned to correct their course.
Demonetization has planted a seed into the minds of those people who thought that their money is safer at home than in the bank. It has made people realize that their hard earned money should not be taken for granted that it will remain safe forever. It made people realize the difference between lazy money and hardworking money. People overnight realized that their money is better off in the bank working hard to make more money than sitting at home doing nothing. It brought a sense of reality and responsibility about their money, just like a child the people had to be reminded the value of money, and that is exactly what demonetization did.
Today, after almost 7 months from the night demonetization was announced, I sit on my work station and go back in time. A tea stall owner who had no idea of what a debit card can be used for, now knows not just about debit cards but holds a debit card with pride, just because he had always dreamed about withdrawing money from an ATM and not stand in line to withdraw at a branch. Senior Citizens who cursed the computer for making the youth lazy and ignorant are today learning not just how to use the computer but also making online payments. Home engineer women who save every penny they can find for a rainy day have opened up standalone bank accounts and continuously deposit the cash in that account so it also earns that interest no matter how small it is but still that money is working.
These small changes in mind sets has the power to bring a massive change. India has realized the value of banking, this is the beginning of a great magnitude. Rome was not built in a day is a time tested proverb and for a country like India with a billion strong working populous it applies even more. Things are changing slowly in India, what is important is India is changing. The seed has just been planted and believe it or not when it grows into a tree, it’s going to the most beautiful tree and the fragrance of its flowers and the sweetness of its fruit will reach far and wide.