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DeMo: A stride towards digital, formal economy, feel experts

Thursday, November 09, 2017

What good or bad demonetisation has brought to the country is still a conclusion which remains too distant, industry experts opine the move has set a tone for formalising an economy which is predominantly run on cash.

Exactly a year ago on this day, Prime Minister Narendra Modi in his address to the nation had announced the scrapping of Rs 500 and Rs 1,000 banknotes, citing corruption, fake currency, terror funding as threats to the country.

A bone of contention between the government and the Opposition parties, the note ban was a highly secret move that shook the whole nation, drawing both criticism and praise from different quarters.

However, the goalpost on its objective was gradually shifted, with the government saying that the note ban decision would lead to formalisation of cash economy as money flow through digital means can be tracked easily.

"It is now a year after the event and, on reflection, I feel that the impact for the banks has been largely positive. Besides, the fact that banks picked up deposits, during the demonetisation drive, a lot of small loans got paid off, many of which were sticky," said Parthasarathi Mukherjee, MD & CEO, Lakshmi Vilas Bank.

A spin-off from demonetisation has been the overall increased emphasis on digital transactions and that channel has seen a multi-fold growth, he added. Bank unions, however, expressed their anguish on the anniversary of demonetisation, saying the government failed to compensation employees for the additional hours put in by them for two months.

The National Organisation of Bank Workers said employees are feeling cheated as the government has not heeded to their demand for compensation against the overtime. It further said that the efforts of bank employees made demonetisation a success but they were left high and dry, it said.

Sounding optimistic, Ashishkumar Chauhan, MD & CEO of BSE, said it was definitely a bold and timely move. "We have seen a considerable impact in the year that followed. The main objective of bringing unaccounted money within the system, and widening the tax base will definitely impact the economy positively going forward by making activities more formal and accountable," Chauhan said.

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