Is 2000 INR New Note Usable in Today’s Crunched Economy

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Following the Indian government’s bold step to demonetize the old notes of 500 and 1000 INR, it was expected that the government and concerned authority must have some ready solution to tackle the cash chaos. But even after three weeks of the decision, the situation is still problematic as people still stand in queues and thronging from one ATM to another in search of liquid cash.

Some get succeeded to withdraw money from the machine while some don’t. Amidst the prevailing nationwide cash crunch, the RBI has introduced the new purple colored 2000 INR note on November 10 this year. But people find it extremely difficult to use it for transaction purposes.

Honestly speaking, unless the situation comes to normalcy it’s almost impossible to use the new note at one go. Obviously, the way people are running here and there to withdraw smaller denomination notes like the 100s, 50s, 10s from banks, certainly, there is no taker of Rs. 2000 INR notes now. Even if some of the people accept it they do so with a certain degree of restraint and reluctance.

The basic reason why people don’t want to take such notes of the big denomination is the wide gap in the value of notes of 500 and 2000. The common man might feel it is easier to transact four currency notes of new 500 notes than a single 2000 rupee note in the current chaotic economy. It will surely take time when people will start accepting such notes for their day-to-day transactions.

Why People Don’t Accepting the New 2000 INR Notes

  • The current situation doesn’t let a person withdraw more than Rs. 2000/- per day from ATMs per card. They find it more convenient to withdraw money in 100 rupees notes than a single 2000 rupees note.
  • Grocery and vegetable sellers carry their day to day business with very limited cash. It’s definitely impossible to imagine that a vegetable seller will exchange your Rs. 2000 note for a limited purchase worth Rs. 100 or 200.
  • Many people won’t accept the new 2000 note for the single reason that it will be highly difficult for them to get the same exchanged when they need.
  • The current psyche of the people is to hold as much cash as possible in hand. So they won’t take your Rs. 2000 note until the restriction limit on cash withdrawal is revoked.
  • To meet our daily small transactions such as medicine bills, vegetable and fruit expenses and conveyance by way of rikshaw or bus, what we really need are the smaller notes of 100s, 50s and 10s and not the 2000 INR note.
  • If more and more people get enlightened about the new digital payment systems such as e-wallets, paytm, Bank transfer, chque payment and NEFT, then sooner or later the quantum of cash transactions with denominations of 2000 and 500 will reduce to a large extent.

In order to instill faith of the people in transacting with the new 2000 rupees note, there is an urgent need for the government to enhance the supply of paper currency of smaller denominations such 500/100/50. Meanwhile, also people need to give away their habit of cash holding practice in smaller denominations or preference to hold cash for liquidity purposes.

However, people can still use the new 2000 notes where sizable expenditure is required such as the medical charges for surgery or to buy costly house appliances or IT products. Another way to use such notes is when you pay a big sum of money to your landlord as rent.

Is India’s GDP expected to fall Post Demonetization Scheme?

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Before proceeding with the discussion on the short term and long term ramification of Prime Minister Modi’s demonitisation move to ban 500 and 1000 INR currency notes, we need to understand that India is still a developing economy with most of the transactions take place through liquid cash.

Not all people in India are included in the banking system. Probably that’s the reason why “Jan Dhan Yojna” initiated by the central government saw a whooping participating of such a huge chunk of people.  The government can definitely take a credit for the same, but it also brings India’s stark reality of development to the fore. Even after 69 years of the nation’s independence, India couldn’t successfully ensure cent percent financial inclusion of all its citizens.

Now coming back to the aftereffect of demonetization, we need to realize that a country’s economy can’t run by whims and fancies. A rationale must be there before taking any serious decisions such as the demonetization. It followed with a nation-wide liquidity chaos and even after two weeks the crisis won’t seem to go away so easily.

If the current state of cash crunch continues for a few weeks more then there’s no doubt that the nation’s economy is set to plummet further in the following months. Indian economy has definitely come to a standstill at this point in time. Common people and SMEs (Small and Medium Enterprises) are definitely bearing the brunt.

The Decision Was Right but Implementation went wrong!

Nobody doubts the intent of the government but they are questioning the modus operandi of the banks to tackle the current problem. The government’s decision to demonetize 500 and 1000 INR notes was announced on November 8 to curb the rising black money and fake currency menace throughout the country.

Initially, it was believed that situation would become normal within a few days. But the problem still persists and people are clueless even now. Empty ATMs and long queues inside and outside the banks are a daily occurrence now. At least, ATM machines should have been recalibrated beforehand to prevent the current nation-wide cash chaos.

The current crisis will surely leave its negative impact on the overall economy of the nation. The GDP growth of 2017 and 2018 is set to be heavily hit due to the decision. However, in the long term everything will return to normalcy and boost the nation’s economy as well – it will take time.

The Effect of Cash Crunch on India’s GDP Growth

Some economists are of the view that around 2% of the nation’s economy will decelerate in FY 2018. At present, India’s projected GDP growth rate is around 7.3% but after this demonetization, it is expected to stay somewhat around 6 per cent.

According to a report, the ongoing cash crisis has affected around 40% of the nation’s daily transaction. Currently, 86% of the total money in circulation consists of 500 & 1000 INR currency notes. Obviously, when the entire 86% of the money in circulation would cease to remain legal tender – its impact was bound to be severe.

India is basically a cash-based economy with most transactions take place through cash. Especially, in day-to-day businesses like grocery, vegetable and medicines – retailers usually prefer cash than cheque or electronic mode of payment. Cash has continued to remain a preferred mode of a transaction because it’s prompt and conventional.

However, the demonetization move of the government has its own advantages too. Prime Minister Modi has simultaneously tried to solve three persistent problems of Indian economy i.e. a parallel economy backed up by black money, hard-to-recognise counterfeit currency notes of 500 & 1000 INR and also the terror financing. The decision will certainly prevent hoarding of unaccounted cash, tax evasion and investment of black money in realty sectors in future.

 

Business down by 40% – Transportation Afflicted by Demonetisation

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Raja Angam (68) has been an auto driver since 1978. “After years of hard-hitting savings I brought an auto in 2010, but because of Ola and Uber I could hardly earn Rs. 500 and now that the government has demonetised Rs. 500 and Rs. 1000 notes, I have to drive for 16 hours to earn as low as Rs. 300,” he told dismally.

The decision of demonetisation in a speech by PM Narendra Modi on 8th November has afflicted Raja Angam and many alike. From auto rickshaws to pick-up vehicles, demonetization has comprehensively taken a toll on the transportation business.

Looking sporadically at a group of women standing at Institute of Mathematical Sciences (IMSc) gate, Angam said, “You see the women standing there? I asked them if they want an auto and they said that their cab is coming.”

Angam explains that people don’t have change to travel by auto and he too can’t help that. “So they are opting for cheaper options like share cabs and auto.” But he is unaware of the fact that cab drivers too are reeling for the same reason.

Shivaji, an Ola cab driver, was depressed by Modi’s decision. “Modi has no children to feed, so it’s easy for him to take such a decision, it is us who have to suffer.”

For Shivaji, business was good as he was conveniently making 2000 rupees per day, “But today, making Rs. 1000 has become a daunting task.” He pointed out, “It’s 3 pm already and I have made only Rs. 300 since 8 am. Young people who used my cab for movies and nightouts have no cash. Every time I stood near IIT, I was flooded with cab requests, but now it takes about an hour before I find a passenger.”

“The problem is that there is no money for rotation and moreover Tamil Nadu hasn’t yet received its new 500 rupee notes.”

He was cynical about the government’s claim of a crackdown on black money. “As long as we have rich politicians, black money is going nowhere,” said the 53 year old with a smirk.

His thoughts were reiterated by Purushotamman, a 41 year old Bolero Maxi truck driver. “Money is already running at the high level, but people like me are suffering even though corruption is happening. Look at what happened in Gujarat,” he said while talking about the government employees arrested by the Gujarat police for accepting Rs. 4 lakh bribe in Rs. 2000 notes.

Purushottamman is still being paid in old notes of Rs. 500 and Rs. 1000. “The contract engineer pays me in old notes and I have to go to the bank to deposit. I went to the bank on Wednesday and stood in line for 6 hours and then the bank said that there was no cash. I was helpless and had to revisit the next day. The day I go to the bank is the day I make no money,” he said showing his Rs. 1000 note.

“Petrol pumps are unwilling to put fuel below 500. So although my truck tank is full, I don’t have money to run the house,” said Purushottamman, a father to a school going girl and two college boys.

Even though many are sad about Modi’s demonetization step, not everyone is skeptical about its impact. “I am being paid in old notes and there is no problem with that because the petrol pumps are exchanging my money. The cash crunch problem is only for a few months and then it will be back to normal,” said Raja, looking at the travelers exiting the Chennai domestic airport, with a hope of getting a customer for his black and white taxi.

Even though Raja’s business has been hit hardly, he is optimistic over the government’s move. “I am hardly making Rs. 2000 now as compared to Rs. 4000. I go to the bank everyday in the morning and get back to work by 12. This takes up a lot of my time, but I feel that this is a good step.”

Demonetisation has diverted passengers from autos and taxis to buses and trains. C. Venugopal, who runs a saree shop in Sowcarpet, used to travel by cab everyday from Velachery, but now does so by MRTS. “Even after the ban, I commuted by cab because I thought it would all be normal in a few days, but it didn’t happen. Then I decided to MRTS to save money because I can’t go to the bank every day.”

Ravi, who gives ticket at the Indira Nagar ticket counter said that demonetisation hasn’t affected the MRTS. “MRTS tickets cost just Rs. 5 or Rs. 10. Currency notes of lower denomination are usually exchanged and therefore the crisis has not directly affected the transport system. However, not many have applied for a season ticket in the past one week. Let alone 500 and 1000, People who comes with 100 rupee notes are a problem for other passengers at the ticket counter,” he said.

On the other hand, MTC buses have seen a significant surge in the number of passengers. Raja Panti (28), a bus conductor pointed out, “Generally we have 600 passengers in an eight hour shift, but now we get more than 700 passengers. Even though today (Sunday) is a holiday, we have had 500 passengers already.” This was at 2.15 in the afternoon today.

Panti said that there is not much of an exchange problem in MTC. “We get only 100s, 50s, 20s and 10s from passengers and even if they are giving Rs. 2ooo notes, we exchange them.”

The story of Ola, an Indian cab service giant, is way different than the negative impact on the traditional transportation system. Especially because the company has used the cash hungry India economy to build up its digital payment solution.

A report carried by the Indian Express on November 9 said that Ola Money, part of taxi aggregator Ola, Wednesday reported over 1500 per cent increase in recharges across 102 cities of its operation in past 15 hours after government withdrew circulation denominations of Rs 500 and Rs 1,000 currency notes in a major move against black money and graft. The surge in recharges was seen between 8:30 PM till midnight.

Recently the company also launched a new ad campaign that was showcased on all platforms with the tagline, “Nahi rukega India, cashless chalega India.” The tagline translates to ‘India won’t stop, India will ride cashless.”

How far will the likes of Ola will suffocate the likes of Raja Angam, is a wait and watch story. Until the government comes out to protect their livelihoods, the future generation will unfortunately not know what it meant to shout ‘auto’.

Choose to Meditate

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So what is meditation? Well, it can be a lot of things.

The word meditation has its origin in the Latin word Meditari, which translates to deep thinking and concentration. In short, meditation has everything to do with concentration and focus.

There is no hard way or easy way to meditate. Anybody and everybody can do it. It does not require any set of skills, all you need is to do it. Is that all?

Not exactly!

Meditation, as mentioned before is the art of focusing, which can be really hard for us people who are mostly multitasking. To meditate, one needs to let it go.

Many a times people confuse meditation with postures. Meditation has nothing to do with postures, it has nothing to do with physical abilities. Meditation is all about focusing on what is going on in your head and understand why.

The most amazing part of meditation is that you don’t really need to understand or think about why you are thinking what you are thinking because your mind is already doing that, but you need to be aware of it, be conscious of it.

What are the benefits?

The first thing that one shouldn’t think before meditation is about its benefits. You must throw out all external ideas of what good or bad meditation can do to a person. You must leave it to the process itself. It will guide you to its positives which is not physical in nature, but mental.

It builds and improves your mental health. In simpler terms, people feel move lively and healthy after meditation. Just like doing yoga improves your physical performance, meditation improves the performance of your mind and your brain.

Meditation revives the energy that we often loose for the kind of lifestyle we have. Human mind is always occupied with thoughts of demand and success and getting happy, which in its own times takes a toll on our minds and creates a gap between what our mind in its naked form requires and what we on the other hand need for ‘satisfaction’.

Meditation gets you in touch with yourself again, but one should not take it for granted. Meditation is a responsibility of handling your true nature, of being truthful to yourself while you go through and see alive the thoughts that you are mostly unconscious about.

Our reaction to these thoughts must be frank and we should accept them in  their natural form, for only then we can reap the benefits of feeling light headed, energized and happy. Meditation should not be confused with a physical betterment, although it can be helpful there as well. It is a way of communicating with ourself and we must do that truthfully.

Postures?

One can lie down, stand, sit, or be in any position. All you need is to close your eyes in whichever position you feel comfortable and let your thoughts flow. Do not forget to stay conscious of what you are thinking, that’s where the meditation lies, so look at your thoughts, but don’t react to them. Just be conscious of them.

The most important thing to note is spend some time meditating. Spend at least 30 minutes everyday doing it and then only you shall feel the impact.

Another Elderly Man Dies after Standing in Que for Money

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A 70 year old man from Eastern Uttar Pradesh district of Azamgarh, died of a heart attack after standing in a queue outside a bank in Maharajganj area.

The old man Ishteyak Ahmad, a retired teacher was standing in a queue when he fell unconscious standing in the queue. Although he was immediately taken to the hospital, he could not be saved.

Only a few days back, a 73 year old man Vishwanath Vartak had collapsed due to a heart attack in Mulund, Mumbai while standing in a queue outside SBI branch. Others in the queue admitted Vartak to the hospital, but unfortunately he could not be saved.

People have rushed to exchange 500 and 1000 rupee notes through banks after the government of India initiated a ban on 500 and 1000 rupee notes. People have been asked to exchange their notes until December 2016 after which the currencies will not be taken and circulated.

Modi’s shocking announcement has got ordinary citizens at a fix who are running up and down to tackle the shortage of new currency and dealing with long queues at banks and ATMs.

The notes of 500 and 1000 account for roughly 87% of all notes in circulation across India that runs on cash. As per 2015 Tufts University study, less than 10% Indians had made payments without using cash. The report also said that the value of notes and coins as compare to India’s economic output, or GDP, was about 12%, which is significantly higher than the likes of Brazil and South Africa, where it is under 4%.

Modi government argues that the step to demonetize will have a good impact on Indian economy in the long run and said that the problem faced by the people is temporary.

Manohar Parrikar, Union defense minister said that ‘demonetization ended stone pelting in Kashmir’, to which Congress President Farooq Abdulla responded by saying that it is a misconception that demonetization and board exams would end the unrest in Kashmir Valley. He also said that the “storm” would rise again.