Demonetization: Fortune or Misfortune?
Narendra Modi – Prime Minister of India took the country by storm on November 8, 2016 by scrapping high denomination notes of Rs.500 and Rs.1000 and introducing brand new Rs. 500 & Rs. 2000 note. His only motive behind this action was to abolish the corrupt practices surround Indian black money. He gave a tight deadline to exchange old notes and there was a beeline at the banks. The situation started becoming chaotic and he extended the deadline for depositing, withdrawing and exchange of notes. However, demonetization had a great impact not only on common man but also on entrepreneurs.
Several people had higher demonetization notes and exchanging them and depositing them was a hurricane task. Many middlemen got badly affected because of this move yet there were majority of people who embraced this move with open heart. Businessmen are mostly affected because there is a section of people who still accept only cash and no card payment or electronic transfer. E-commerce too suffered the brunt as they still have an option called cash-on-delivery (COD) and bigwigs in the initial days of demonetization had to completely stop it. Flipkart, snapdeal and other eCommerce players had to discontinue COD and had a hard time to balance the orders which were accepted before demonetization.
COD has been a major game changer not only for entrepreneurs but also for customers. Many customers still do not have bank accounts or possess any kind of credit/debit card or digital wallet. With this demonetization move, PM wants more people to have bank accounts and transact online. Also, the problems people face while having COD can be wiped out with this move. Many entrepreneurs receive their payment only after the delivery is made and also suffer losses in logistics, so in a way this movie will help them cope up with their financial losses.
Transaction through cash was a major player, but this move has thus brought about a new wave in digital wallet. Today, bigwigs dealing in digital wallets like PayTM have seen a rise in users. With this, consumers will not have to stand in queue to pay their electricity bills because that will be made on a click through this digital wallet too! Not only this, but if you forget your physical wallet and want to travel by cab, digital wallet will come to your rescue to sort your woes.
Well, COD as I mentioned above is the main mode of payment of eCommerce players and thus it saw a fall of 70% of business. But we feel in the coming days, the condition will definitely improve with times. As Modi government is most emphasized in undertaking tasks online, then offline stores will then have to come up with an online store. Most of the transactions of offline storage are carried on cash and with this new monetary curtailing soon every store will have to come up with digitalization. In fact, several offline stores have already started giving varied payment option, then cash, which is thus helping in maintaining transparency.
Kishore Biyani-led Future Group, which operates Big Bazaar, the largest retail chain in the country, is encouraging consumers to use cards. “In our urban stores, around 40 per cent sales happen through cards. In smaller towns and cities, that number is around 25 per cent. We will introduce cheque payments and encourage people to go digital. We are also going to promote debit card, digital payment and gift cards,” CEO, Future Group, Kishore Biyani was quoted as saying in an interview.
If this is the case on one side, some experts feel that this move might hamper the small merchants because the bigwigs have resources to offer digital payment modes unlike the small merchants. The small merchants not only lack resources but also have financial crunch. “Non-Corporate Small Business Sector (NCSBS) forms the economic foundation of India. It is also counted among the largest dis-aggregated business ecosystems in the world, which sustains upwards of 50 crore lives. The biggest threat to the NCSBS comes from online/e-commerce players along with large corporate/organised players who offer choice and convenience of digital payments. We feel it is about time that both small business owners/merchants and consumers to see underlying benefits of transacting digitally,” National President B C Bhartia and Secretary General Praveen Khandelwal, CAIT noted in a joint statement.
So, this fight against black money and corruption will definitely need patience yet people have embraced with open hands. Offline stores, who are now making arrangements for going digital, then don’t worry as eCommerce site builder like Mart2Web will help you to the fullest in setting up your online store right from scratch!