The latest step taken by the PM is a historic move in the India’s history. I believe it marks a new beginning for India’s economy. It’s like BC(Before Currency) and AD( After Demonetization) for me. While in longer run, it is a great move for all around growth of country, in the shorter run, it will surely call for huge knee jerk reactions across businesses. Black money is a reality of Indian business and the growth that businesses enjoyed till date. No Louis Vuittons and Omegas were accounted, neither did one need a PAN card to be associated with while shopping. The liquidity that consumer businesses enjoyed for years was primarily funded by parallel economy. Cash is the reality of luxury lifestyle splurges. Travel, luxury, lifestyle, automobiles, real estate, COD (eCommerce), gadgets, watches etc. and a long list of consumer businesses that will see a huge meltdown. Only 3% of Indians pay tax. Both bottom and peak of Indian income hierarchy has been largely funded by unaccounted cash and its suddenly no more liquid.
Some of the large malls saw their daily footfall dropping by more than 50% in the last 48 hours. As I said, ‘After Demonetization’ will call for completely new rules of business. Rules which are yet to be identified, customer segments that are now to be redefined, product lines which will be re-looked at. Next 5-year projections plans, funds will no more be realities. Business assumptions are back to square 1. A new world of consumers and their consumption patterns will evolve.
We welcome the move and look forward to some larger infrastructural turnaround, improved trade policies, efficient governance, transparent bureaucracy, tax benefits, social securities, secured and predictable economic growth, increased income levels, and much more, which will in turn help strike consumption equilibrium in the white economy. Until then, let’s pay tax regularly! And keep you cash safe 😉
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