Impact of demonetization on vendors &

hawkersSubmitted by:Trishala Gautam147084

Presentation outlay

• Introduction• Impact of demonetization• Impact of demonetization on hawkers and vendors• Current Scenario• References

Introduction • According to former governor of Reserve Bank of India

Raghu Ram Rajan, “demonetization is the act of striping a currency unit of its status as a legal tender”.

• In simple words demonetization can be referred as a change of national currency in which the old unit of currency are retired and replaced with a new currency unit.

Year of demonetization

Currency demonetized

Government under which demonetization took place

New currency after demonetization

Year in which new currency came.

1946 1000 & 10000 British rule 1000, 5000 & 10000

1954

January 16, 1978

5000 & 10000 Janta Party coalition under the leadership of Morarji Desai

- -

November 8,2016

500 & 1000 Bharatiya Janta Party under the leadership of Narendra Modi.

500 & 2000 2016

Significance • The need for this paper is to shows that how demonetization

has affected the unorganized sectors of economy with the special reference to hawkers and vendors.

Impact of Demonetization

• Parallel economy• Money supply• Demand• Prices• GDP• Banks• Rural Sector• Different economics entities.• Online Transactions and alternative modes of payment

Impact of demonetization on vendors & hawkers

• To know the effect of demonetization on vendors and hawkers the personal interview of vendors and hawkers are taken and their results are as follows:

• The sample size of research is 20 out of which 12 were vendors (60%) and 8 were hawkers (40%).

60%

40%

VendorsHawkers

• After demonetization weekly sales of hawkers and vendors decreased upto 70%-80% The main reason for decrease in their sales was shortage of cash as instead of buying from vendors and hawkers people preferred to go to modern retail stores and departmental stores where online payment is acceptable so that they can make transaction without cash.

• 50% of them do not have bank accounts, and 30% of them access bank only in their home town. Whereas only 20% of them have bank account in the city they are living. So it was bit difficult for hawkers and vendor to change demonetized notes of 500 and 1000 Rs. with new currency.

having bank account in current city/ town

having bank account in home town don’t have any bank account

20

30

50

% of people

• Some of them have opened their bank accounts through Jan Dhan Yojana but hardly had they deposited any of their savings in them. They prefer to keep their savings at home so that they can use them at the time of uncertainty. Only 20% of them deposit their savings in bank accounts.

prefer to save donot prefer to save

20

80

no. of people

• It was the said by Manohar lal (one of the street hawker) that before demonetization he was able to save 300 to 350 Rs. per months but after demonetization he was not even able to cover up his and his family basic needs. So whether he should fulfill his basic needs or save money.

• Following graph shows percentage of vendors and hawkers able to withdraw money from bank/ATM.

easily little bit difficulty very much difficulty not at all

15

50

40

5

• Many of them having bank accounts were not able to debit money from their bank accounts and ATMs. They have to leave their work and stand in long queues for taking out cash from banks and ATMs.

• On this Ram Lal (a street vendor) said that whether he should go to his workplace and earn money or he should stand in long queues and wait for his turn to took out his savings from Atm/bank. He also said that sometime it also happened that he is waiting in queue and as his chance came to withdraws cash, no cash left out in Atm/bank.

Hawkers need supply of cash from the last day’s trisection to start a new cycle in the morning. Without cash there business is not at all of any worth.

A hawker Kanta Ram said that the informal economy of India which employees working class in higher number has been impoverished after demonetization.

Hawkers and Vendors do not have any immediate plans to switch over to new modes of money transfer. And for them handling a card swiping machine is a costly affair.

• However if they arrange to buy card swiping machine or Smartphone but they don’t know how to access it and if somehow they learn to access them then also they face several problems such as:

... •how to recover deduction of money from failed transaction.

... •if they input wrong amount how to correct it.

... •how to check whether or not amount is deducted from failed transaction.

• 85% of hawkers and vendors face difficulty in using online mode of payment while 15% of them find out it easy to use.

85%

15%

difficulty in operationeasily operated

• Demonetization on other side have some positive aspect too as on the other hand some vegetable vendors and small traders have began the use of cashless payments like PayTm, UPI, MobiKwik, freecharge, card swiping etc as people were unable to undertake transaction through cash in the absence of Rs 500 and Rs 1000. It has somewhere promoted PM’s cashless India mission.

• 70% of vendors are availing online payment services to keep their business going.

vendors availing online payments

70

percentage of vendors availing online payments

• A peddler Ramu Das said that his sales decreased after demonetizations. People use to come with old currency notes which were not acceptable so he started PayTm service in his store.

• 55% of vegetable vendors and street vendors had installed PayTm in their mobile, 30% of them are using card swiping machines and the one who are not having Smartphone’s i.e. 15% are using *99# service started by our PM for accepting payment.

PayTmCard Swiping Machine

*99# service

55

30

15

percentage of hawkers and vendors

Current scenario• Researcher asked various question regarding future perspective of

demonetization. On this an argument was given by Saroja Singh (a golgappa vendor) that suddenly after demonetization they faced many problems but as time passed out situation is handled and their lifecycle is back to track.

Demonetization has motivated cashless transaction in economy.

Because of shortage of cash people start preferring online mode of payment and shopkeepers started prevailing online mode of payments .

After situation being handled people still prefer online mode of payment as it is much safer to carry plastic money or PayTm rather than to keep cash in wallet.

It’s a kind of 1st step toward PM’s digital India mission.

References

Personal interview of hawkers and vendors to know the impact of demonetization on them.

www.finmin.nic.in/Impact_of_demonetization_on_different_sectors_of_economy(Ministry of finance)

rbi.org.in/faQs/meaning_of_demonetization