the impacts of demonitisaton on the daily life of venders

1. Demonetization And Its Effects On Vendors
Presented by; Sangeeta Yadav
Under the guidance of
Dr. Rajesh Kumar Shastri
Assistant professor
MNNNIT ALLLAHABAD

2. Presentation Overview
 Introduction to demonetization.
 Demonetization in India.
 Impact of demonetization
 Pros and cons of demonetization.
 Effects of demonetization on Indian economy.
 Effects of demonetization on society.
 Reactions of general public.
 Demonetization for vendors.
 Facts and figures.
 Conclusion.

4. • According to former governor of Reserve Bank of India Raghu
Ram Rajan, “demonetization is the act of striping a currency
unit of its status as a legal tender”.
• In simple words demonetization can be referred as a change of
national currency in which the old unit of currency are retired
and replaced with a new currency unit.

5. DEMONETIZATION IN INDIA

6. • Inflation : It will cause inflation in the market as people who have
earned money through illegal ways would be afraid to declare the money
as they may be prosecuted by the Income tax department on the
legitimacy of their income.
• Reduction in Monetary Circulation: This will lead to reduction of
money circulation in the economy leading to deflation. Value of money
will be increasing which we have because the total money supply will be
going down but the commodities and things available in the market have
not gone down. It will lead to inflation slowly but not overnight.
IMPACT OF DEMONETIZATION

7. IMPACT OF
DEMONETIZATION(CONTD.)
• Cash Deposits in Banks: A lot of cash which are legally
earned will be deposited in the banks and now the banks with
more deposits will be able to do more lending.
• Easy Loans: Loans will become easier and interest rates may
come down. As banks will have more money so more loans will
be given out which will increase the money supply in the market
and it will create inflation.

8. PROS AND CONS OF DEMONETIZATION:
• PROS:
• The major decision which is made by the government will help
us to eradicate black money, corruption to some extent.
• Due to lack of funding there will be no arms smuggling and all
the terrorist activities will also be choked.
• Financial Intelligence Unit will track all details of the
transactions from the banks. So now it is really difficult to get
rid of the black money.

9. PROS (CONTD.):
• Exchange of money in banks can only be done producing a valid identity
cards like PAN, aadhar card and electoral card from 10 to 24 November with
a daily limit of Rs.4000. By doing so it will be easy for the government to
track the money which is being exchanged in banks. There is no limit if the
amount which we are exchanging is legal amount.
• Real estate industry is totally corrupted and now by this stringent decision
the real estate sector will bring in more transparency. By doing it in this way
we will have more credibility, making it more attractive to the foreign
investors as well as domestic investors.

10. CONS:
• It will cause great inconvenience to common man who will start running
to bank to exchange Rs.500 and Rs.1000 notes.
• By replacing all the Rs.500 and Rs.1000 denomination notes, as ordered
by the government, could cost the RBI at least Rs.12000 crore.
• It will be very difficult for half of the population who are not well
versed with the card transactions.
• The major problem is that big fishes will be left out whose black money
is in the form of foreign currency, gold and property and stashed in tax
havens.

11. EFFECT OF DEMONETIZATION ON
INDIAN ECONOMY
• It will likely hit the economy hard in the short term.. The service sector,
which dominates economic activity and involves a sizable chunk of
cash transactions, will likely be hit the hardest.
• GDP growth in the quarters from September to December 2016 and
January to March 2017 could be significantly lower than previous years.
Some bounce back should be seen in the first quarter of fiscal 2017–
2018.
• The demonetization that has been in effect since November 9 is
expected to have a negative impact on inflation. Consumer spending
activity fell to a near halt.

12. EFFECTS OF DEMONETISATION
• The Demonetization has badly hit Maoist and Nasalises as well. The
surrender rate has reached its highest since the demonetization is
announced. It is said that the money these organizations have collected
over the years have left with no value and it has caused them to reach to
this decision.
• Real estate industry is totally corrupted and now by this stringent
decision the real estate sector will bring in more transparency. By doing
it in this way we will have more credibility, making it more attractive to
the foreign investors as well as domestic investors.

13. • A huge fall in HUMAN trafficking was assumed. All the transaction of
selling and buying used to happen through cash mainly in the form of
₹500 & ₹1000 notes but now there is no liquidity which has hit the
business badly.
• The scarcity of cash due to demonetisation led to chaos, and most people
holding old banknotes faced difficulties exchanging them due to endless
lines outside banks and ATMs across India, which became a daily
routine for millions of people waiting to deposit or exchange the ₹500
and ₹1000 banknotes since 9 November.

14. • Several people were reported to have died from standing in queues for
hours to exchange their old banknotes. By the end of the year 2016,
opposition leaders claimed that over 100 people had died due to
demonetisation.

15. • The day after the demonetisation announcement, BSE SENSEX crashed
nearly 1,689 points and NIFTY 50 plunged by over 541 points. By the
end of the intraday trading section on 15 November 2016, the BSE
SENSEX index was lower by 565 points and the NIFTY 50 index was
below 8100 intraday.
• Transactions in the Indian agriculture sector are heavily dependent on
cash and were adversely affected by the demonetisation of ₹500 and
₹1,000 bank notes. Due to scarcity of the new banknotes, many farmers
have insufficient cash to purchase seeds, fertilisers and
pesticides. Farmers and their unions conducted protest rallies against the
demonetisation.

16. Dumping of agricultural produce
• The demonetisation led to unavailability of cash to pay for food
products. The reduction in demand that arose in turn led to a crash in the
prices of crops. Farmers were unable to recover even the costs of
transportation from their fields to the market from the low prices offered.
The prices dropped as low as 50 paise per kilo for tomatoes and onions.
This forced the farmers across the country to dump their products in
desperation. Some farmers dumped their produce in protest against the
government.

17. Strikes
• As the demonetisation was opposed in both houses of the parliament, it triggered
organised nationwide strikes across India.
• The Opposition involving parties like Indian National Congress, BSP,DMK, JD(U),
AIADMK, Nationalist Congress Party, Left, Rashtriya Janta Dal and the Samajwadi
Party decided to observe ‘Akrosh Diwas’ as, a protest campaign day on November
28 and launch protests in front of banks, demanding that money be returned to
people.
REACTIONS OF GENERAL PUBLIC

18. Support
• The decision met with mixed initial reactions. Several bankers like Arundhati
Bhattacharya(Chairperson of State Bank of India) and Chanda Kochhar (MD & CEO
of ICICI Bank) appreciated the move in the sense that it would help curb black
money. Infosys founder N.R. Narayna Murthy praised the move.
• Finance Minister Arun Jaitley said that demonetisation would clean the complete
economic system, increase the size of economy and revenue base

19. DEMONETIZATION FOR VENDORS
• The need for this paper is to shows that how demonetization has affected the
unorganized sectors of economy with the special reference to hawkers and vendors.

20. PROBLEMS IN WITHDRAWING CASH
• However if they arrange to buy card swiping machine or Smartphone but
they don’t know how to access it and if somehow they learn to access them
then also they face several problems such as:
...
• how to recover deduction of money from failed transaction.
...
• if they input wrong amount how to correct it.
...
• how to check whether or not amount is deducted from failed transaction.

21. Demonetization has motivated cashless transaction in
economy.
Because of shortage of cash people start preferring online mode
of payment and shopkeepers started prevailing online mode of
payments .
After situation being handled people still prefer online mode of
payment as it is much safer to carry plastic money or PayTm
rather than to keep cash in wallet.
It’s a kind of 1st step toward PM’s digital India mission.

22. FACTS AND FIGURES
• It has been reported that 97% of the demonetised notes are back in banks and
banks have received Rs 14.97 trillion ($220 billion) as of December 30 out of the
15.4 trillion rupees that were demonetised. The return of 97% of money back in
bank have a negative impact on government's move against black money.

23. EFFECT ON STOCK MARKET

25. • 50% of them do not have bank accounts, and 30% of them access bank only
in their home town. Whereas only 20% of them have bank account in the city
they are living. So it was bit difficult for hawkers and vendor to change
demonetized notes of 500 and 1000 Rs. with new currency.
20
30
50
having bank account in current city/ town having bank account in home town don’t have any bank account

26. • Some of them have opened their bank accounts through Jan Dhan Yojana
but hardly had they deposited any of their savings in them. They prefer to
keep their savings at home so that they can use them at the time of
uncertainty. Only 20% of them deposit their savings in bank accounts.
20
80
prefer to save donot prefer to save

27. • Following graph shows percentage of vendors and hawkers able to withdraw
money from bank/ATM.
easily little bit difficulty very much difficulty not at all
15
50
40
5

28. • 85% of hawkers and vendors face difficulty in using online mode of
payment while 15% of them find out it easy to use.
85%
15%
difficulty in operation easily operated

29. • 70% of vendors are availing online payment services to keep their business going.
vendors availing online payments
70

30. • 55% of vegetable vendors and street vendors had installed PayTm in their
mobile, 30% of them are using card swiping machines and the one who are
not having Smartphone’s i.e. 15% are using *99# service started by our PM
for accepting payment.
PayTm
Card Swiping Machine
*99# service
55
30
15

31. The Conclusion
• After demonetization weekly sales of hawkers and vendors decreased up
to 70%-80% The main reason for decrease in their sales was shortage of
cash as instead of buying from vendors and hawkers people preferred to
go to modern retail stores and departmental stores where online payment
is acceptable so that they can make transaction without cash.
• Demonetization on other side have some positive aspect too as on the
other hand some vegetable vendors and small traders have began the use
of cashless payments like Paytm, UPI, Mobiwik, free charge, card
swiping etc. as people were unable to undertake transaction through cash
in the absence of Rs 500 and Rs 1000. It has somewhere promoted PM’s
cashless India mission.