Industry Leaders' Reactions on Demonetization of 500 & 1000 Currency Notes

Since prime minister of India Narendra Modi has announced demonetisation of 500 & 1000 Rs notes, every one has diversified opinions about the action. There is no doubt every one has its own opinion on this step but the currency change will surely going to impact industries. And what leaders think about it, lets find out…

Mr. Anwar Shirpurwala, Executive Director, MAIT

"MAIT compliments Prime Minister Modi for his action against corruption and black money and strongly supports the Government in its mission of transformation of India. We applaud the decision taken by the government to eradicate black money. The move taken by the govt. clearly indicates that we will be depending more and more on the ICT. This move has been possible because of the availability of technology and multiple means of financial transaction. This also calls for the Govt to further look for means of increasing IT penetration, thus enabling every citizen to use technology tools and services for cashless transactions. Govt. should continue to give more emphasis on technology led schemes and programs for the betterment of the economy growth."

Mr. Prashant Mehta, VP & Global Service Line Lead- Systems Integration & Data, SapientNitro

“This is a bold and game-changing move by our PM. It will have a significant impact on black money (or so called parallel economy) and corruption and will help pivot the world's largest democracy into a digital economy. With the implementation of Adhaar based direct subsidy payments, a large part of the country was encouraged to open bank accounts. This move will further increase the user base and help drive higher financial inclusion across a broader section of the society including the lower income segment.

India has one of the highest growth rate in mobile usage and this move will drive adoption of digital wallets, helping financial inclusion even for people without bank accounts. With the steady rise in small transactions made via digital wallets and online payments such as for auto, cab rides, petrol , grocery, etc, this move will accelerate the adoption of digital payments for such services by individuals as well as shopkeepers & SMEs. Furthermore, I am excited for the opportunity to use Data analytics & Machine Learning to get better insights into financial planning for individuals and businesses while getting meaningful insights at a city / state / country level leading to a data led economy driving more informed decision making.”

Mr. Sameer Grover, Founder and CEO Crownit

"Crownit drives large volumes of business to local merchants and facilitates payments for those merchant. It has an option of hassle free cashless transaction and is the best way to deal with the present situation. This demonetization move by the Modi Government is extremely bold and refreshing. India is now on direct path to fully digital economy to ensure corruption free country which we are proud of."

Mr. Mayank Bhangadia, Co-founder and CEO Roposo

"This step taken by Sir Narendra Modi is path-breaking and revolutionary, as it sets a great example on how to bring change boldly and effectively. We as a nation have to fight corruption and what a way to begin! This bold move is just another instance of the Modi government’s vision of corruption free India."

Mr. Rajeev Jain, Chief Financial Officer, Intex Technologies (India) Ltd.

“A full-blown war, not just a surgical strike, has been declared by the Indian Government against black money. Withdrawal of high denomination currency notes of Rs. 500 and Rs. 1000 is a very powerful measure to swipe off the unaccounted wealth and corruption that has crippled the Indian democracy for four decades. Rise in the gold price and spurt purchasing signify trivial repercussions of this move. Out of the current Indian population estimated at 123 crore, only a minimal fraction of 2.87 crore individuals filed their income tax return and even lower, one percent or 1.25 crore, paid taxes in FY 2014-15. This is certainly an alarming figure to quote, especially considering that we are a progressive nation.

With the PM's announcement, the honest tax payers will get their fair play. Rapid increase in traffic, frequent foreign travels, business favours and other affluence corroborated large-scale tax evasion. The nation's biggest crackdown will certainly check black money and cross-border monetary transactions of counterfeit currency. This will curb corruption to a large extent and also ease the life of common citizens. Unequal monetary distribution among income groups will also be addressed to some extent, eventually leading to financial inclusion of the under-privileged.”

Mr. Manish Sharma, President CEAMA

“Demonetizing high denomination notes is a bold step towards the vision of Digital India. For the consumer durables industry, in the interim this might cause inconvenience to small consumer durable players located in the hinterlands as the reach of banking system is still basic. However, in the long run this is likely to drive several benefits for the economy.

With the advent of cashless economy both NPAs and demand for working capital credits is likely to increase and thus banks will have a key role to play here.

Moreover with the limited tax arbitrage between organized and unorganized segments the industry will see a faster shift from unorganized to organized segment.

Usage of digital currency and online payment systems driven by UPI, wallets and cards will be on the rise as customers will increasingly opt for e-commerce platforms. It will further position improve India’s stature as a corruption-free, transparent nation globally, enabling higher capital flow (FDI/FII). CEAMA congratulates the government on this significant move.”

Mr. Rahul Gochhwal, Co-founder, Trupay

"During the changeover period of phasing out old currency notes we really believe that a lot of people will move towards digital payments options due to curbs on roll out of new currency.  A big chunk of population will move towards digital payments not out of choice but perforce with this bold move by Mr. Modi."

Mr. Sathvik Vishwanath, CEO and Co-Founder, Unocoin

"The intentions are good but very difficult to achieve. If going cashless is the only way forward, certainly the bitcoin which is borderless trustless and transparent currency makes more sense".

Mr. Manavjeet Singh, CEO & Founder, Rubique

"This is a promising move made by the  government towards cashless economy.  This will boost innovation in the nascent electronic payment industry. Without doubt, this will bring down frauds and thefts and costs of printing cash. A great blow to black money. If executed well, the costs of doing transactions between buyers and sellers will lower significantly by 2019."

Mr. Ranjit Punja, CEO &Co-founder, Creditmantri

"Sweeping step taken by the PM, but this should have a positive impact in curtailing black money and reducing corruption. Likely to cause some temporary hardship, and with the introduction of the Rs. 2,000 note, along with the security and tracking features, currency will be used as intended."

Mr. Kunal Bahl, Co-founder & CEO Snapdeal

“We welcome the Government’s bold and courageous move to weed out black money, which will have significant long term benefits for the economy. With this, the quantum of India’s economy moving through the digital pipes will witness massive growth. Both Snapdeal and FreeCharge are committed to supporting all such initiatives.”

Mr. Raghav Himatsingka,Founder, Truckola

"The demonetization of the currency is a watershed moment for the transportation industry. This USD 200 billion industry forms the backbone of the country and contributes nearly 13% of India’s GDP but is a completely cash driven industry. Everything from driver salaries, toll taxes, diesel and illegal police and RTO expenses are paid in cash. In a large number of cases, even freight charges paid by clients to their transporters are made in unaccountable cash.

The demonetization will significantly reduce the illegal road expenses of police, RTOs and other government officials. It will thus make transportation cheaper, more transparent and technology oriented. It will also reduce the number of non-fragmented players operating on cash and will increase the importance of tech-enabled aggregators such as TruckOla, who follow transparent and legal transactions. We thus look forward to not only easier implementation of our tech  based services, but also more willingness from  industry players to adopt our new way of working, embarking upon a new era of rapid growth."

Mr. S Sriram, CEO, iValue infosolutions

“This is one great move by the government of India. It will serve the country on the long run. The major implications will result in faster GDP growth, inflation will fall, and products will become more affordable which will fuel the demand and further growth of the industries.

On the other hand, inflation will fall along with stronger growth. Products will be more affordable including large ticket items like housing. Once cleaned up, further generation of black money will be dramatically cut down and more transactions will happen electronically instead of cash and hence the counterfeit will reduce. There won't be much of an impact on the IT industry  as they prefer purchase and sales through banking system only."

Mr. Abhiraj Bhal, Co -founder UrbanClap

"Prime Minister Modi’s directive is historic. It will leapfrog our payment ecosystem towards digitisation. Its hard for marketplace businesses like UrbanClap to fully fathom the wide spread impact of this move right now. My view is, cash on delivery will soon become a thing of the past. At UrbanClap, we have put in place features like “book now - pay online after service” to fully capitalise on the same."

Mr. Viren Bavishi, Director, TAIT

"Demonetisation of the Rs. 500 and Rs. 1,000 currency notes is one of the boldest steps to curtail the parallel economy fuelled by 'black money' while at the same time cutting off financing of terrorist activities. For SMEs, I don't see any major ill effects - in fact, this move would mark the onset of increased adoption of transactions through IMPS/NEFT/RTGS and mobile wallets that will bring in more convenience and transparency."

"With GST likely to be rolled out from 1st April 2017, this demonetisation of old currency notes will complement the government's move to ensure higher 'tax compliance'. Strict tax compliance will help SMEs running legitimate businesses, who generally find it difficult to compete with smugglers and those dealing in contraband goods."

"While there may be hardship for a week or two, thereafter things are expected to settle down, and people in general, including businesses, would be able to get cash when needed through authorised banking channels. In the long run, this move will accelerate economic growth through the digital pipes of e-commerce and m-banking. It will make larger revenues available to government in the form of income tax collections to fund infrastructure growth and development."

Mr. Padmanabha Krishnamurthy, CFO, Paladion Networks

''Withdrawing old high denomination (OHD) notes is a brilliant move by the Modi Government. It will contain the rising incidence of fake notes and black money. Though there would be some logistical issues for the common man to exchange OHD notes, on a larger scale it will serve the purpose. On the brighter side it encourages people to transact more on electronic mode payments like NEFT / RTGS / Internet banking, mobile wallets, IMPS, credit/debit cards, etc.  Government and RBI should encourage electronic payment transactions by making it free of cost for the people by eliminating the transaction fees that bank charges for the electronic mode transactions. On the cyber security front, it emphasizes banks to have a more secured banking platform for its customers to do electronic transactions and increase customers’ confidence level on it. In the recent past, we have seen vulnerabilities where certain bank accounts were compromised, etc. This has resulted in an increased focus and investments on Cyber Security spend from the banks, mobile wallets companies, etc. This would help facilitate the growth that we could see in the electronic mode of banking transactions in India.'

Mr. Sudip De, Director at DOEL International Pvt Ltd.

"DOEL applauds for the step taken by PM Narendra Modi to curb corruption.A Master Stroke to bottle up both terrorism and black money stashed in gunny bags and lockers.  It will affect the traders who carry in processors, memory storage and flash products. Otherwise IT and mobility are pretty settled business through national distribution. All cash businesses would be hit. Legal distribution through NDs & RDs would thrive to topple the grey market; trade would be hit in the short term but in the long term people would learn to do their business through cheques or net banking. I just hope the daily wage earners are not hit. Most of them have not been able to decipher the entire process clearly and they should be educated. I prefer sudden jerks and so am happy the way it has been done. Any bad habit goes off in a jiffy. It is not planned"

Mr. M A Mannan, Country Manager, India at Corsair

"This is a great initiative by the government and a bold step towards future. Though it came as a surprise but everyone should appreciate and support the initiative to flush out fake currency, black money from our country. Biggest plus is at least this government is initiating some kind of actions against black money which is good for the economy. Minus from this development is to wait and watch, as money demonetization has happened before in history but with no effects on black money. Suggestions could be many but when it is done it's done. It should have been done in a phased manner to start with 1000Rs and then to 500Rs.

IT industry won't be affected much by this step as all business ethics are followed in IT industry. For imports we do it thru banks so not much changes. It won't curb grey channel market but will surely have an adverse effect on the products which are promoted by grey channel. Money transfer would be a daunting task for grey guys."

Mr. Sanjay Patodia, CEO at Galaxy Office Automation Pvt. Ltd.

"The ban on big currency notes will definitely going to give a positive boost, but only in the short term. The government is allowing people to deposit money into the system, but also reserve the right to audit it. There is still not much clarity on some points like the penalty for not depositing money in a given time frame and the rates of the penalty for late deposit.The other thing to look forward is how the government can sustain this impact. With the arrival of new big currency the government should make efficient plans to curtail on cash money.

Although, this step will help in increasing cash flow for the banking system, which is currently facing a lot of deficit issues which further can lead to help businesses and industries. Overall all the industries will get benefitted since liquidity will come directly into the banks, which will lead to a rate reduction and hence more cash will flow into the market as part of the loan. This will create a positive impact on corporate who can get more liquidity for newer projects and investments."

Mr. Rajan Chellappan, Managing Director at Optiserv Solutions Pvt Ltd.

"We will call it a calculated step by Government of India towards the economic growth of the country. This step will help in making cashless transactions a mainstream. However, this will not going to affect IT sphere, particularly the organized IT industry, where all the transactions are done through banking systems only."

Mr. S Sriram, CEO, iValue infosolutions

"This is one great move by the government of India. It will serve the country on the long run. The major implications will result in faster GDP growth, inflation will fall, and products will become more affordable which will fuel the demand and further growth of the industries.

On the other hand, inflation will fall along with stronger growth. Products will be more affordable including large ticket items like housing. Once cleaned up, further generation of black money will be dramatically cut down and more transactions will happen electronically instead of cash and hence the counterfeit will reduce. There won't be much of an impact on the IT industry  as they prefer purchase and sales through banking system only."

Mr. Rohit Agarwal, CEO at Astrum Electronics India Pvt Ltd

"First it was like a big shock but, in reality this is really going to be of great help to nation and its economy in long term, for short term there will be chaos and tightness in liquidity. For IT industry there is not going to be a major impact as our industry works mostly (around 90%) in bill and there is only less component of it which is in real cash, if we talk about branded materials. But those who are not selling brand and are importing material from China it will be big challenge for them as there 90% business in cash. The main issue will be at the consumer level as most of the people are buying in cash and people are not habituated to use of debit and credit card so sales will suffer in short term. This move will help brands to grow and helps in curbing the fake, grey market, and Chinese import cash sales. Most importantly, I think the way money is going to be sucked in the system there is no way to get liquidity back in the system immediately. I mean for a person who is salaried or doing his business 100% in bill he will also have a cash crunch. There should have better availability for replacing old currencies, as there is limit for withdrawal of money, which can cause trouble for common people to manage day to day expenses.

But, this move is designed to lock out money that is unaccounted for - known as 'black money'- which may have been acquired corruptly or being withheld from the tax authorities. So we are flattered by this 'Master Stroke' to reduce corruption, black money and promotion of digital economy."

Mr. Satish Kumar V, Country Head at DMX India

"We are proud of this bold decision taken by the Indian Government. The amount of planning and systematic preparation is appreciable and the daring step is worth lauding. As per now, there should not be any major impact on the general IT sector as we have a highly structured business to deal with. In fact, this is a welcoming opportunity for the IT industry as the dependency on the banking & online transactions and, communications is set to grow exponentially. This development would help hardware / software / services players to perform smart business, maintaining a transparent track record. It is also a boost to the start-up segment that can now take the cashless transactions and related shopping / purchase related experience to new levels of comfort with their innovative platform & service idea."

"Right now we only see the positives from this measure by the government & Reserve Bank. Firstly, this step can bring grey market commodities / illegal money lending / money laundering etc., under control which is otherwise unmanageable. Furthermore, it can alleviate the lives of our farmers, artisans and similar other sections. By actively participating in micro and rural financing through official means, they can actually come out of the clutches of money lenders & middle men.

While the demonetizing announcement with immediate effect is the highlight of the idea, the government and the banking sectors has to take the responsibility to come to the rescue of the general population to ensure minimal confusion and more normalization of day to day operations as well as facilitating industry specific needs.

Overall, the gradual transition starting with Aadhaar/ PAN/ Bank account linking, penetration of digital wallets and online services, multiple instances to declare black money followed by back end preparation of new currency will definitely bring evident changes in the governance."

Mr. Biswas Nair,Founder & Managing Director at Inspirria Cloudtech

"I feel the sense of surprise was important for this kind of strategic action. There couldn't have been any better way of bringing about this change. The demonetization of high-value currency is a bold and impactful change taken by the government to curb the menace of black money, corruption and counterfeit currency notes, especially a surgical strike on the so called parallel economy.

This decision will be hardly impacting businesses in the IT industry as most of the transactions are done digitally. But, certainly the largest employee base in the IT industry may feel the inconvenience in near future because of the pull out of the 500 and 1000 currency notes. We need to understand that these young employees are one of the most avid spenders too, albeit some of them have moved to debit and wallet money. The demand for digital money will eventually lead to more use of plastic and e-wallet money, providing a great boost to the e-wallet companies like PayTM and Citrus as they will drive more adoption from the fence sitters."

"The biggest plus is that people who have this so called black money will be in serious trouble as the amnesty period is over with the IDS scheme on Sept 30 and if they declare the wealth now they pay 60% tax compared to 45% through IDS 2016. Also, the reality bubble will be over and reality as a source to channelize black money will also end bringing in parity with the realistic prices. I also hope that the security measures for these new currencies are more stringent to have any future worry of fake currency.

There would be a little inconvenience for commoners for their daily consumption for the next few weeks till the new currency comes into circulation. Also, there would be an issue with foreigner visitors who have already converted their currency into old notes and may not have much option left, though I guess they will still have their debit/credit card available for usage..  Also, there is no clarity if the Indian tourists who are currently travelling overseas can exchange these invalid monetary currencies in overseas countries."

"We hope that the ATM's and branches should quickly flush-up with the new currency and restoring normalcy. The media (social and traditional) were well used to communicate the information to the population at large and hope the same has been done through AIR and Panchayats to reach out to the rural audience too."