You are on page 1of 3

Demonetization- The Good in Disguise

A history was created in the great saga of Indian Economy on 8 th

November 2016, when the Indian Prime Minister, Narendra
Modi, announced the withdrawal of Rs. 1000 and Rs. 500 from
the list of legal tender. This created quite a stir in the public and
they stood divided on the view if Demonetization is good or not
worth the trouble.
Yesterday, Nandan Nilekani, who shaped the world's largest
biometric database with India's Aadhaar project,in a statement
supported the step and stated certain points on how Demonetization will prove good for
India. He is confident that the government's ban on 500 and 1,000 rupee notes will ensure
that financial inclusion rises. Mr Nilekani, co-founder of IT giant Infosys, predicated that
digital transactions will shoot up considerably in the next 3-6 months to a rate that would else
have taken 3 to 6 years. He also said that any short-term retrenchment in economic growth
will be compensated for very quickly with digitization. A lot will depend on the next three
months. If the digitization is accelerated long-term, it will be a very good development and
will benefit everybody. According to him the demonetization drive will accelerate the roll out
of digital financial services in India supported by Aadhaar, UPI, USSD and micro ATMs.
He also said that the more important thing is when the economy becomes formal, when
everybodys financial transactions are digitized, India is going to go from data poor to data
rich and that will make it more and more complex for people to do dishonest things or to be
outside the system. This will reduce the amount of black money in the system.

The highlights:

A big step for financial inclusion.

The long journey of getting Indians into formal economy will be accelerated.
Economic growth will bounce back.
The currency ban will give a boost to digital transactions. It has its own set of longterm benefits.

India's growth will come from services and digitization.

India will move from being a data poor-to-data rich country.
Digitization will compensate for the short-term slowdown and adoption of technology
will lead to long-term benefits.
Unified Payment Interface will benefit the country immensely.
The notes ban shock to the financial system will also extend to the political system.
Other Benefits:

Fake currencies out of Circulation.

Cash with terrorists and terrorists group wasted.
No riots especially in Kashmir due to lack of funds.
Jan Dhan Accounts operational
Mobile ATMs for hospitals.

Nifty after Demonetization:

On the day of Demonetization, Nifty share price was trading at 8543 Level. After the shock
of Demonetization and Election of Donald Trump as US President, Nifty50 dropped to 8416,
slipping by 128 points then pulled up 17 points to close at 8432 level. Nifty reclaimed its
8,500 level as it traded at 8526 on November 10 th before losing 417 points in three trading
sessions to close at 8109 on November 15th, lowest close in nearly four and a half months,
mirroring the weakness in Asian shares. Ever since, the Benchmark Index Nifty has failed to
reclaim its 8500 level and is trading at 8100 level. It has maintained its Brexit low and is
taking support of 8000 Levels.

The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research
team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022

Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also engaged in Investment Advisory
Services and Portfolio Management Services. Dynamic Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare
that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI,
Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor
penalty on for certain operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst: DYNAMIC/its Associates/ Research Analyst/
his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject company.
Do not have any other material conflict of interest at the time of publication of the research report
Have not received any compensation from the subject company in the past twelve months
Have not managed or co-managed public offering of securities for the subject company.
Have not received any compensation for brokerage services or any products / services or any compensation or other benefits from the
subject company, nor engaged in market making activity for the subject company
Have not served as an officer, director or employee of the subject company

Article Written by
Tanaya Nath