Startups And Demonitisation: The Good, Bad, and Ugly

Startups And Demonitisation: The Good, Bad, and Ugly

 Prime Minister Narendra Modi bravely and visibly demonetised the 500 and 1,000 rupee currencies. The entire nation experienced shock and panic as a result of the news in less than a few hours.

 

The surgical attack on black money by Modi, as many are calling it, was a daring and unexpected action. But how can we expect things to work out in the midst of the billions of tweets, thousands of memes, and endless uncertainty and haze? Who will be most impacted by this plan? Most importantly, how will this situation impact startups and small businesses?

The Instant Response

The demonetization, which aims to battle black money and counterfeit money, will create an atmosphere of chaos, confusion, and instability. Deflation is the direct result of this activity. Due to the large amount of black money currently moving throughout the country, the total currency circulation will decrease.

 

There will be many problems for regular people, especially those who are hesitant to use credit cards and digital currency. Small firms will be particularly affected, especially those who deal in instantaneous cash.

Workers in the working class who depend on cash payments, such as drivers, electricians, cooks, and vendors, will experience hardship. Many others won't even be aware of the same. In addition, many analysts believe that while the scenario is stressful for some, it is a straightforward transaction for others.

 

For at least a few weeks, there will frequently be longer lines at banks and ATMs.

 

What Impact Will This Have on Startups?

Startups will profit the most. However, it will take some time for the plan to be properly implemented and attain the balance it seeks.

"Stricter measures against black money have long been needed to help promote greater openness, to offer the Indian real estate sector more credibility, and to make it more alluring for foreign investors," said Anuj Puri, JLL. In the unorganised market, black money trades are more frequent, but with increased consumer knowledge, this practise has been declining. The stereotype that black money is what drives Indian real estate will soon be out of date.

 

It's a terrific and quite daring approach. According to Niranjan Hiranandani, CMD of Hiranandani Developers, "we feel it will eliminate murky transactions for the real estate business." as quoted by The Hindu.

At Long Last

The nation will experience inflation after a respectable amount of time of toleration. There will be a balance, and many businesses will benefit from the situation overall. White money holders and businesses will find it simpler to transact, and digital currency will attract some attention.

 

People will have to put up with a lot of rapid change in the short term. Even so, PM Modi's commendable action would improve the Indian economy and give the country the upper hand in the protracted battle against illegal companies, black money, and funding for terrorism.