8th November, 2016. The day a Rs. 1000 note had no value. The Prime Minister announced via a nationally televised broadcast that India had undergone demonetization and the country was in turmoil for the next few months. But, what seemed like a curse, turned out to be a boon as well as a bane. Let’s see the light and the dark sides of the moon called Demonetization.
The Change of Taste
Demonetization has affected the way we deal with money. We are totally transforming into a cashless country by the 2030s and currently, demonetization impact on the digital industry is huge.
- The definition of demonetization includes the words “To discourage a cash system in a country”. And exactly, that has been foreseen with this plan.
The Digital Essence
India was so immune to black money that demonetization is a really good move. The developed countries all use E-payments and even some countries which are less developed than India, such as Kenya. They have been using E-payments from the last decade. 90% of our transactions are in cash. This gives rise to the need to carry cash in person. The flipside to that habit is that hoarding of cash is not illegal.
- Demonetization has taken away the need to have such habits by changing the way cash flows. If you need to pay your bill, no need to go down to the kiosk. All you need to do is tap a few times on your phone’s screen and your job is done.
The Impact of Demonetization on the Digital Industry
The day after Demonetization was announced:
- Paytm has seen an increase of 25,000 customers.
- The e-wallets like Razorpay and Mobikwik saw a 10-fold increase in the customer base, simply because there was no other way payments could be made.
- They were at the right place and at the right time in the history of India.
- The move to E-payments has been supported by the fast spread of the Unified Payments Interface (UPI). National Payments Corporation of India (NPCI), which deals with the stage, has recorded hundreds of millions of UPI exchanges in October 2018 as against a few thousand in November 2016.
The flip side of demonetization impact
As there are good effects, there were bad effects too of a huge policy decision by a government.
- E-Commerce companies such as Flipkart, Snapdeal reportedly removed the COD (cash on delivery) option for purchase during that time. The shortage of cash forced them to lose business.
- The real estate industry suffered, which in turn made the digital advertising industry suffer as the immediate launches were pushed back.
After demonetization, residents, neighborhood merchants and everyday businessmen are gradually becoming acclimated to E-payments. When they become accustomed to it, they will acknowledge it as a method of progression and a measure to battle fraud. Urban India has been in the advanced overlay for a couple of years now. Demonetization has additionally set off the upscaling of computerized platforms. For instance, the flood in E-payments drove TechProcess, India’s largest E-payments platform, to scale up its technology.