Cash Ban Threatens to Cripple India’s Job Market

16.12.2016 • Politics and War

Vivek Kaul – The Vivek Kaul Letter (India) –

As I have been saying in my regular columns,  paper  money  is  basically  a  token  which  is  used  to  carry  out  transactions.   You   take   the   token   out  of  the  system,  the  transactions  stop.  Of  course,  paper  money  is  not  the  only  form  of  money.  There  are  various  other  ways  of  carrying  out  transactions  using  cheques,  credit/debit   cards   and   payment   apps,   as   well.
The   trouble   is   that   the   Indian   economy  thrives  on  cash.
98   per   cent   of   the   consumer   transactions in India happen in cash. By value, the figure stands at 68 per cent.  As  Credit  Suisse  points  out  in  a   recent   report:   “The  distribution channels of everything from consumer staples   and   discretionaries,   oil marketing companies, pharmaceuticals to  even  many  two-wheelers  operate primarily in cash. The non-institutional part  of  the  cement  and  metal  value chains also use cash. Truck operators also work primarily with cash (a driver would  be  given  cash  for  diesel  and tolls).”
In this scenario, it isn’t surprising that   transactions   across   different   markets  all  over  the  country  have  come down dramatically.

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