Disruptive for India
The government has provided no official explanation behind the note ban that is backed by hard data. what followed was chaos — amateur execution and shabby planning contributed to mile-long queues, ATM machines that had not been recalibrated for the new 2,000-rupee notes, banks that ran dry before mid-day, panic-induced hoarding and broken supply chains.
It is not just the large corporations and big investors, but the spending ability of the common man — vegetable vendors, meat sellers, small food stall owners, taxiwallas — to buy goods and avail services is critical in a consumption-driven economy. When spending doesn’t happen on the ground, the resultant shock wave goes up to the layers above and reflect in the corporate earnings and, finally, macro-economic numbers.
The small but significant institutions that cater to the bottom of the pyramid — such as hundreds of cooperative banks across the country and microfinance institutions — are nearly paralysed due to the demonetisation exercise.
Thousands of small and medium enterprises and start-ups are hit badly. These segments too are key contributors to the economy by way of spending and contributing to the production chain
Those utterly ruined
Who are those who were utterly ruined? — The labourer who was laid off in industrial hubs like Tiruppur, Surat, and Moradabad. The daily wage earner who could not find work in farms or mandis or on construction sites. The self-employed, selling flowers or fruit or pav-bhaji, whose customers vanished for several weeks. The artisan plying his trade (carpenter, electrician, plumber) who got no calls. The small businessman whose sales fell by as much as 80 per cent. The truck owner and truck driver whose trucks were idle for several weeks. with death in queue . Fall in commodity prices for which there will be no compensation; tragic deaths, the number of which is more than 100,
not even a natural calamity could have wreaked such havoc across the country. Pensioners suffer as banks still struggle without smaller notes.
who are the losers? — The average person who was compelled to make several visits to the bank to withdraw money from his own account. The person with a few old notes who had no access to a bank branch (because of distance) and exchanged her notes at a discount. The homemaker who had to scrounge for money to provide at least one meal a day for her family. The patient who had to forego his treatment at a hospital because he did not have money in his hands. The student who got his meal at the langar in the neighbourhood gurdwara. The farmer who could not buy seeds or fertilisers or hire labour and took a hit on productivity.
Worse is yet to come.
India’s richest 1% hold 58% of country’s total wealth: Study by rights group Oxfam ahead of the World Economic Forum (WEF) . showed that just 57 billionaires in India now have same wealth (USD 216 billion) as that of the bottom 70 per cent population of the country.
PSU banks write off Rs 1.54 lakh crore bad loans.
Corruption Has Increased In Last One Year As India Slips To 79th Rank In The Global List. The better connected send it abroad. According to Global Financial Integrity (GFI) India has exported an average of $46 billion each year for the past decade.
If ATMs are dry, where’s the raided stash coming from? . Based on the search and seizure of new bank notes in crores from the homes of bureaucrats and the well-connected, now we know why.