Posted 08 Aug 2017 05:16 PM

Indian Government demonetized the Bank notes of Rs 500 and Rs 1000 on 8th November 2016. The Govt. took this extreme step in order to catch hold of the black money transactions going on within the country and to bring illegal counterfeit cash as well as terrorism to an end. This paramount action shook the whole country and the banks were seen flooded with people. There were plenty of unpredictable deaths that took place.
The stocks crashed and fell over 6% on the next day after the implementation of demonetization. Initially, the step received criticism from various parts of India which turned into agitation, protests, and strikes against the Govt whereas some international economists and Banks supported the initiative.
More than 8 months have been passed and people are eventually coming back to the normal situation. Some sectors have recovered a bit from the economic tornado whereas some are still struggling with the prevalent situation.
According to Moody’s report, India’s economic growth will take a leap of 7.5% in the present fiscal and Govt’s reforms will help GDP to grow at a rate of 8% in the coming four years. They have even predicted that the economy will increase from 7.5% to 7.7% in the fiscal year (2018-19). The economy grew 7.1% in the year 2016-17. They mentioned that banking sector is becoming weaker due to the high proportion of delinquent loans on Banks balance sheets which will weigh on growth. The bad effects of demonetization are for a limited duration.
World Bank also mentioned in its report that India will reach to a 7.2% of economic growth in its current fiscal year.
Govt is continuously working on its key reforms which comprise of liberalization of FDI rules in numerous sectors like defense, insurance, railway infrastructure and civil aviation. Apart from the Direct Benefit Transfer scheme for fertilizer, food, and kerosene, GST and National bankruptcy code are the other reforms by the Govt to be undertaken. A combination of such reforms will help India to recover from the crisis. Inflation rates have declined by 3% since April.
Whereas the sectors most hit by demonetization is predominantly “Real estate” which is unable to recover from the crisis and which is leaving a bad after effect on the laborers as they are finding it difficult to employ themselves in some sort of construction work. Earlier they used to find work 25 days a month whereas now they are getting work only 10 days a month.
As everything in this world has its pros and cons, so does demonetization have? Let’s hope that India will recover from these circumstances with time, as time is a healer.

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