Sunday, 13 November 2016

CONS after banning of 500₹ and 1000₹ notes

Cons:-
  • People will rush to ATMs and Banks to exchange 500 and 1000 rupee notes. People will try to withdraw as much money in 100 rupee notes from ATMs. Even to withdraw Rs. 2000, they will transact for 5 times withdrawing Rs. 400 each time to avoid Rs. 500. That what happened on 9th November night after the declaration.
  • Many people, especially from the rural India, aren’t aware of the total fact. Suddenly they will realize that the 500 rupee note they are carrying is useless. If the village panchayat or administration could help them, then they might understand the scenario fully.
  • Extra cost to replace all the existing 500 and 1000 rupee notes: Printing new notes needs money. Declaring old notes as invalid and putting new notes into system will cost a good amount. The details are discussed in this link. Scrapping Rs500, Rs1000 notes a costly idea
  • People with low working class will be slightly affected: Generally people like plumber, maids, manual scavengers, electricians don’t have huge amount of 500 or 1000 rupee note. They only convert them to bigger notes when they have to carry out transaction in large sums and those are rare. Other than that, they get money after the end of month and that in 500s. These people aren’t aware with procedures of bank, mostly. Moreover, it’s not easy for them to not go to their job and spend times by standing on queues in banks.
  • India is not fully ready for cashless transaction: Regions like rural India, North East India, township areas, sub urban areas, etc aren’t modified enough to go for total cashless transactions. Many normal people of metropolitan cities too, are not fully computer literate and they are not fully accustomed with internet, or payTM, etc. Basically, a huge number of people are not accustomed with cashless transactions.
  • Ineffective for black money stored in other forms: Corrupt politicians like Jayalalitha don’t store black money as liquid cash. She converts them into gold. People like Amitabh Bacchan keep black money as foreign currencies in foreign banks. This decision can’t force them to surrender black money.
  • Opposition will misguide people to take political advantage: Due to short period of notice, many people aren’t aware of how to exchange the 500 and 1000 rupee note. Many people don’t even know that Hospitals, Air ticket booking counters, petrol pumps are accepting 500 and 1000 rupee note for 72 hours till 11th November. They will be easily misguided by other political parties for the upcoming UP election. On 9th November, I saw some interviews of common people taken by various news media. Some people appreciated the decision. Some were criticizing it with abusive words. A guy said- “I have 500 and 1000 rupee note. I need to purchase petrol but Petrol Pump isn’t accepting it”. An old man standing beside him said- “Government had said that petrol pumps and hospitals have been asked to accept 500 & 1000 rupee note till Nov 11”. The other guys started objecting by shouting so much that the old man couldn’t even complete his sentence. He was pushed back by them who were criticizing the decision. Basically these guys stopped the man from sharing some information and clearing people’s doubt.
Some points to know:
  • Government has given time from 10th Nov to 30th Dec to exchange 500 & 1000 rupee notes.
  • Till 11th Nov, petrol pumps, hospitals, air ticket counters will accept 500 & 1000 rupee notes.
  • No confirmation from RBI that new 2000 rupee notes has nano GPS chips.

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