India recently withdrew the big bank notes in an effort to cut tax evasion, terrorism, and government corruption.
It has caused cash crunch in the economy and analysts have lowered India’s growth forecast in the wake of the move.
Still, the impact won’t necessarily be all negative for India’s economy in 2017.
CGTN’s Radhika Bajaj explains.
Indian economy: Mixed impact after withdrawal of big bank notesIndia recently withdrew the big bank notes in an effort to cut tax evasion, terrorism, and government corruption. It has caused cash crunch in the economy and analysts have lowered India's growth forecast in the wake of the move. Still, the impact won't necessarily be all negative for India's economy in 2017. CGTN’s Radhika Bajaj explains.
As a snack food vendor with a small shop, Narendra Kulkarni’s business has always been reliant on cash.
In the aftermath of the currency ban, which sucked out 86 percent of currency notes from the Indian economy, his business slumped.
He was apprehensive about trusting technology with his money but that changed after a digital wallet brought business back on track.
Small businesses are now fueling the growth of big ones.
The push to depend on less cash has given them a boost.
Digital payment providers are struggling to keep up with demand after the government asked banks to add a million card swipe machines at retail locations before the end of this fiscal year in March 2017.
That’s in addition to the 1.5 million machines that are already in circulation.
Credit and debit cards aside, e-wallets are also gaining traction among consumers.
PayTM, the most widely used in India has added nearly 650,000 new merchants and 15 million people have downloaded the app after the PM’s shock announcement on November 8.
Transactions driven on record are widely expected to delay the implementation of India’s biggest tax reform in decades.
But many believe it may make the GST more effective, and enable it to surpass analyst estimates for growth.
Despite causing a big shake-up, the money ban is likely to help the prime minister achieve a key objective- bringing more foreign investment into a country riddled with red-tape.
While the knock-on impact of fight graft has already been appreciated by key trade partners- the US included.
Looking forward to 2017, the money ban will redefine and influence key decisions. But many believe it will only help India retain its ‘fastest growing emerging economy’ tag.
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