Rs 500 & 1000 notes scrapped: how the move will impact you and the economy

How the move impacts the common Indian

1. The government has given 50 days' time period - 10 November to 30 December - to exchange Rs 1,000 and Rs 500 notes at post offices and banks.
2. Those unable to submit all old currency notes within the deadline will be able to do so at the Reserve Bank of India up till 31 March 2017 by providing a declaration.
3. You will have to stand in long queues at banks to replace your old currency notes with new ones.
4. There'll be a limit on the withdrawal of money from banks and post offices - Rs 10,000 per day and Rs 20,000 per week. This means if you do not use an ATM or electronic transfer for transactions, you will have big problem in purchasing things from the market.

Economists' reaction

While most economists kept their comments on the government decision reserved, Abhijeet Sen, former member of the now-defunct Planning Commission said: "The common man will have big trouble in the coming days in dealing with this decision. People in cities have ATMs as well as banks nearby, but people living in rural areas will find it difficult to deal with this decision. They usually keep cash at their homes, and cannot go to banks every day."

What Sen said found resonance in the real life situation of Suresh Kumar, whose son is getting married in a small village in Himachal Pradesh soon. "I have all the money in the form of Rs 500 and Rs 1000 notes. How will I make payments? The only bank (at Joginder Nagar) is 30 kilometres away from our home," Kumar told Catch over the phone.

Impact on the economy

The decision to make the existing Rs 500 and Rs 1,000 notes illegal will be a setback for black money hoarders. But it will also mean hard days for small-time retailers who trade in cash.

This means small-scale jewellers, grocery shop owners and small vendors will find it difficult to sell their products in the absence of hard cash.

On the other hand, showrooms that accept credit and debit cards are likely to register a spike in their sales, as people will have no option but to pay through their cards.

Kishore Biyani, chairman of Future Group, told NDTV that he was apprehensive about the government decision because credit and debit cards account for only 30% of sales in his group's stores.

Another impact is likely to be on the real estate market, which usually runs on mostly-cash deals from people who like to stash undeclared money in the form of property.

Edited by Shreyas Sharma

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