Rs 500 and Rs 1000 Currency Note Ban: IT Hubs to Witness Drop in Sales

So the bombshell was dropped at the stroke of midnight in what is being increasingly called India’s 9/11 moment. The government has in one stroke sucked wealth of the very popular black money market and simultaneously caused commotion in cash transactions for atleast the coming week. With high denomination currency note ban, people having left counting for leftover 500 and 1000 rupee notes to figure out how much they need to keep ready for exchange at banks once the opportunity arrives or as an immediate task to put them off on somebody else’s back, read petrol pumps, milk booths, etc. Already we are witnessing serpentine queues at all the places that have been given the 72-hour relaxation for accepting the now defunct currency notes.

Cash transactions in non-essential purchases on decline?

As an IT media house we’re curious to find out what effect this shall have on IT product purchases across local IT hubs like Nehru Place in Delhi and likewise in other cities. Most people with few 100 rupee currency notes are not likely to spend them on non-essential purchases unless the banking system revives over the next couple of days. Moreover, with most transactions at such hubs happening with shopkeepers that might not have access to PoS terminals to swipe credit/debit cards, we expect a slump in demand in the coming days at the very least.

Stress test for digital economy

Another key IT platform that’ll be put to immediate stress test is the backend infrastructure for facilitating transactions through cards and electronic transfers. Now is the real time to gauge whether Digital India has the bones to survive such huge influx of ecommerce transactions. If it indeed pulls through then hats off to the government for taking this bold step that rids us of the age-old malaise of the parallel market economy. Had this step been taken in 2011 when fake currency was estimated to constitute 14% of our economy, who knows the Indian economy could have been even more robust today.