Demonetisation - A curse for the common man

Following the Modi sarkar’s decision to scrap the Rs 500 and Rs 1,000 notes, there has been a huge rush outside banks since Thursday and at ATMs on Friday, as people are anxious to withdraw money to meet their daily expenses. Amid woes of customers hit by cash crunch, three people have reportedly died while waiting in queue to exchange their currency notes. After witnessing this chaos, one really needs to ask that who is this policy really affecting.

According to the income tax data, the demonetization of Rs 500 and Rs 1,000 banknotes is unlikely to help the government suck out black money from the economy as hoarders keep a tiny portion of their ill-gotten wealth in hard cash.

Over half of India’s population doesn’t have any sort of bank account at the moment and about 300 million don’t even have basic ID such as Aadhaar and hence, cannot access the banking system at all. About 130 million Indians have mobile wallets (about 25 million have credit cards) and there are maybe 550 million-600 million debit cards in circulation. So access to cash is very, very important for average Indians.

Liquidity in the economic system will be sucked out for several weeks at the very least, due to the very stringent restrictions on cash withdrawals from ATMs, and bank accounts. This policy is till now has only managed to trouble the common man to the extent that it's becoming difficult for them to survive on a daily basis.