Industry hails PM’s demonetization move as a new dawn for Indian economy

It's “historic”, “a watershed moment” in the history of the Indian economy, a real “game-changer”, “revolutionary” etc etc. Well, looks like Industry cannot stop raving about PM Narendra Modi’s demonetizing of Rs 500 and Rs 1,000 notes. Though the stalwarts admit to the inconvenience that would be caused to the masses in short run, everyone’s hailing the bold move to curb corruption and black money in the country.

According to Harshavardhan Neotia, President, FICCI, “This is an extremely bold move by the Prime Minister and will have a debilitating impact on the parallel economy in the country as well as deal a body blow to terror financing. FICCI completely supports this move of the Government and complements it for it's continuous and comprehensive measures to deal with the issue of black money in the country”.

“There could be some inconvenience that this change may lead to for the people of our country for a few days. However, we are sure that government and RBI will take adequate measures to ensure the transition happens smoothly. We appeal to all sections of society to support this initiative and help India’s economy gain strength by addressing the menace of black money and illicit transactions”, he added.

HDFC Chairman Deepak Parekh also stressed that though the realty and construction sector that depend a lot on cash transaction will be impacted but the pain is “worth taking in the short term for long-term gains.”

Also read about CashNoCash.com, which is providing free service to locate working ATMs.

Welcoming the move of banning high-value currency notes, Porush Singh, Country Corporate Officer, India and Division President, South Asia , Mastercard said, “It will enable further growth in the Indian economy by encouraging cashless transactions and reducing the crime rate. The PM's bold action and leadership is a critical step in positioning India to be a leader in the global cashless and digital economy movement. Mastercard is committed to working with the government to provide the cashless solutions that combat corruption, create growth, and inclusion for all members of society."

Given the huge impact of the government’s announcement, State Bank of India Chairperson Arundhati Bhattacharya has given assurance that her bank would be working extra hours to ensure that customers don’t suffer. Speaking to PTI, she said, “We have handled demonetization earlier and will do so again. Tomorrow Banks will remain closed in order to withdraw these notes from counters and ATMs. We will strive to restock ATMs at the earliest and make them operational. The government has given enough exemptions to ensure urgent needs are met. We will work round the clock to ensure that customers have a smooth experience.”

Notably, this is not the first time that the high denomination currency has been demonetized. The first ever demonetization happened in January 1946 with RBI demonetizing Rs 1000 and Rs 10000 notes. Then again in 1978, after Janata Government came to power, bank notes of Rs 1000, Rs 5000 and Rs 10000 were demonetized. And now in 2016 by PM Narendra Modi.

The biggest reason perhaps for the Industry to support this move is that it would ‘curtail parallel economy’.

Kumar Abhishek, Founder & CEO of ToneTag, says “It’s a landmark decision as it ends a parallel black(cash) economy, this now will help digital, cashless economy to take shape . All we need now is to make paying by digital wallets or mobile banking apps, easier and consumer friendly than paying by cash. ToneTag is helping partner banks and wallets to bring simple, contactless and secure digital payments in the hands of common man.”

“Today more than 90 percent transactions are still in cash, majority due to black money. This decision goes a long way in making people declare their income. Once you declare, you go digital.

This will also bring a shift from low volume – high-value transactions to high-volume, low – value transactions. More people will start using digital wallets for day to day transactions," he added.

Sharing a similar statement, ICICI Bank chief Chanda Kochhar told PTI, “It’s perhaps the most significant move ever taken to curtail the parallel economy. It will give a sharp boost to all formal channels of payments which in turn will help the formal economy to grow at a faster clip in the long term.”

Rishi Gupta, MD & CEO, FINO PayTech Limited believes that “this development will definitely encourage the large segment who are unbanked and under-banked to join formal banking ecosystem. As a payments bank, we see this is an extremely positive sign to reach out to these customers for deposit mobilization and investments in a regulated, transparent and safe environment.”

“This will also lead to a surge in the usage of digital payment instruments instead of cash, which will be an encouraging development towards less cash economy and Digital India initiative. It is a matter of time when rural India too catches up. We at FINO are keen to be part of this change and make it happen,” he added.