Real estate, luxury goods worst hit: Check out the winners and losers from demonetisation

Excerpts from a Deloitte report on the winners and losers from the government's bold move

n one of its most significant moves since assuming power, the Narendra Modi – led government demonetised Rs 500 and Rs 1,000 notes in a bid to curb black money circulation in the economy. 

According to reports, the proportion of Rs 500 and Rs 1000 notes were 86.4% of total value of notes in circulation on March 31, 2016, amounting to Rs 14 trillion. The growth rates in these notes were 76% and 109% respectively in the last five years versus overall currency in circulation going up by 40%.

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Though the Rs 500 and the Rs 1000 note ban has inconvenienced the aam aadmi, experts say, the move will have far reaching implications for the Indian economy in the long-run. 

Here is an excerpts from a report by Anis Chakravarty, lead economist at Deloitte, on the winners and losers from the government’s bold move.

SHORT-TERM IMPACT

There will be a disruption in the current liquidity situation as households are likely to get affected by the note exchange terms laid by the government. Though clarity is unfolding, commodity transactions and general cash market transactions are likely to feel an immediate impact. 

Also Read: Tax plus 200% penalty on deposits if income mismatch: Hasmukh Adhia

Unorganised sector proceedings including small trade market activities will remain volatile in the short-term. Roadside vendors, cab drivers, kirana stores etc have already stopped accepting Rs 500 and Rs 1000 notes. It is important to note that a significant percentage of the Indian workforce is employed in this sector which is likely to be affected by immediate liquidity issues. 

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