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Business News/ Industry / 30 days of demonetisation
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30 days of demonetisation

A look at the short- and medium-term impact across businesses, govt efforts to curb black money, and the macroeconomic impact of the move

Photo: Pradeep Gaur/MintPremium
Photo: Pradeep Gaur/Mint

A month after the demonetisation drive was launched, Mint takes a look at the short- and medium-term impact across businesses, the government’s efforts to stay a step ahead of tax evaders, and the macroeconomic impact of the move.

Is government winning the black money fight?

The government has been scrambling since the demonetisation drive began on 9 November to stay a step ahead of black money hoarders. It has had to constantly rewrite the rules to do this, inviting flak for the constant changes in regulations.

From changing the rules governing exchange of currency at banks and post offices as well as on the usage of old Rs500 and Rs1,000 notes in different places to tightening the reporting requirements by banks on cash deposits to proposing changes in tax laws to make it more attractive for tax evaders to voluntarily declare their undisclosed income rather than trying to legalize it through illegal means, the government has been on its toes trying to outmanoeuvre the tax evaders. Read more.

Demonetisation pain for e-commerce, big gain for mobile wallets

The withdrawal of high-value notes from circulation has had a mixed impact on the country’s online businesses. Sales at e-commerce companies, which are heavily dependent on cash payments, have suffered badly while digital payment start-ups have seen a sharp rise in daily transactions. Others such as cab hailing services have seen a slight drop while food ordering and grocery delivery start-ups have seen a slight increase in business.

Online retailers have seen a 20-40% decline in daily orders, according to a report by advisory and research firm RedSeer Consulting. Experts say that it may take at least one month for business to get back to normal. Read more.

RBI gets its messages mixed with 50 notifications in 30 days

In the month following the withdrawal of Rs500 and Rs1,000 as legal tender, the Reserve Bank of India (RBI) issued at least 50 notifications. But what was meant to be a clear communication strategy resulted in even more confusion as these daily evolving guidelines ended up showing the central bank as being unprepared for the problems that the public faced. Often, it went back on promises made earlier.

For instance, on 8 November, RBI put up a list of frequently asked questions promising that exchange of currency notes would be allowed till 30 December. Again, on 11 November, the regulator reiterated that people need not crowd bank branches as they can exchange their cash at their own convenience. On 24 November, the regulator said that no more exchange facilities would be allowed at bank branches. Read more.

Will demonetisation impact on advertising be short-term?

Life for media companies changed overnight when Prime Minister Narendra Modi outlawed old ,000 and 500 currency notes on 8 November. All saw their advertising plummet in days following the announcement. The unfortunate part is that this was their peak advertising season, a time when brands spend heavily. Read more.

Making sense of demonetisation: A Mint reading list

Prime Minister Narendra Modi announced on 8 November that banknotes of high value were being withdrawn from circulation. There has since then been a gush of commentary across the world on whether the currency reform would actually curb the black economy, the extent to which the immediate cash shortage would hurt economic growth, the political calculations behind this gamble and whether there was a fiscal windfall awaiting the government because of the destruction of some part of the currency stock.

Here is a curated list of what Mint editors, columnists and contributors have written on this controversial move.

To read more demonetisation news, click here.

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Published: 08 Dec 2016, 05:06 AM IST
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