According to reports, on November 9 last year, in an unannounced televised speech, Indian Prime Minister Narendra Modi announced a policy that shocked the world:

< p>The 500 and 1,000 rupee banknotes (note: accounting for 86% of the total currency circulation in India at the time) will cease to circulate immediately. Existing banknotes must be deposited in banks or exchanged for new currency within 50 days, otherwise they will become waste paper.

This so-called "financial blitz" against black money, corruption, and counterfeit currency is undoubtedly part of Modi's powerful reforms. But one year later, the reality is far from Modi’s wish.

Triggering unemployment and severely damaging the wedding industry

Every editor has noticed that in early 2017, many institutions such as the Asian Development Bank and the International Monetary Fund issued optimistic expectations for the Indian economy. . However, recent data released by India shows that the situation is not good:

In the first quarter of 2017, India's economic growth rate dropped to 6.1%, and in the second quarter, the growth rate dropped to 5.7%, the lowest in the past three years.

In the view of Liu Xiaoxue, associate researcher at the Institute of Asia-Pacific and Global Strategy of the Academy of Social Sciences and special commentator of Overseas Network:

Obviously, India’s economic growth decline in the first quarter was due to the government’s The result of the impact of demonetization. In November 2016, Indian Prime Minister Narendra Modi suddenly announced the abolition of the old 500 and 1,000 rupee banknotes and replaced them with new banknotes on the grounds of anti-corruption, combating black money and counter-terrorism. Because the Reserve Bank of India did not print enough new banknotes, the "cash shortage" lasted longer than the government expected, bringing unpredictable consequences to the Indian economy. Many industries that rely on cash settlements, such as retail, transportation, and real estate, were hit hard.

The continued economic decline in the second quarter was the result of the uncertainty caused by tax reform on top of the impact of demonetization.

According to Global Network, slow economic development has also led to the loss of jobs. It is estimated that between January and April this year, "demonetization" caused 1.5 million people to lose their jobs. It also had an impact on the labor participation rate, which has not yet fully recovered. The labor force participation rate reflects the ratio of people who are already employed, willing to work, and looking for work to the working-age population.

Recently, Rahul Gandhi, Vice Chairman of the Indian National Congress, wrote an article in the Financial Times:

In India, it is Indian small, medium and micro enterprises that can truly respond to China’s challenges. Business groups, and Modi's reforms dealt a fatal blow to them.

But the Indian government does not believe that the demonetization order has affected employment. According to a report by The Times of India on November 8, Ravi Shankar Prasad, Minister of Information and Communications Technology of India, held a press conference in Bhopal on the eve of the first anniversary of India’s “demonetization policy” on the 7th. He said that only those who do not improve their skills will lose their jobs after demonetisation. Prasad believes that digitalization has created new employment avenues. He said:

“We have provided loans worth Rs 40 crore to 80 million people, including small traders, pushcart vendors and people from lower castes, tribals. and ethnic minority businessmen. If each of them hires at least one person, 40 million jobs will automatically be created."

The Indian wedding industry has also been hit hard by the demonetization order. The Indian Chamber of Commerce and Industry (Assocham) issued a statement on October 23 warning that under the double blow of demonetization and higher goods and services tax, ordinary Indian families may cut wedding costs and the output value of the wedding industry may shrink. 10% to 15%.

The editor has learned that weddings are more important than buying a house in the eyes of Indians. The 2015 India Consumer Report released by Goldman Sachs shows that the average cost of a wedding in India ranges from US$7,500 to more than US$75,000. In contrast, the average annual income of India's urban population was only US$3,200.

Bank deposits are growing, but the status of cash is difficult to shake

According to Global Network, India’s “demonetization order” also has an optimistic impact. Since November 8, 2016, more and more Indians have put their savings into the formal economy, thus inflating the growth of bank deposits. The Indian government claims that this is one of the original purposes of the demonetization policy to gradually dismantle India's large-scale shadow economy.

In the view of Mao Keji, a researcher at the Indian Research Center of Pangu Think Tank:

The most direct beneficiaries of Modi’s “anti-black money campaign” are India’s mobile payment companies and Internet finance.

In his first national speech after the promulgation of demonetization, Modi stated that India's policy goal is a "cashless society" and called on people across the country to "use less cash." In India, where credit cards and credit card machines are not widely available, the subtext of using less cash is to use more electronic payments. Modi even directly mobilized people to learn to use APPs. As a result, Paytm, India's largest mobile payment and commerce platform, and MobiKwik, India's second largest payment platform, have become big winners.

For example, according to Paytm statistics, 4 million people are currently using Paytm wallets, the number of transactions per day has reached a record 5 million, and $3.5 billion in payments and transfers need to be processed. The platform Funds have increased 10 times, traffic has increased 700%, and the number of app downloads has tripled... But this boom is due to the fact that many new users are already using smartphones and just transfer their remaining money to mobile payment tools. This group of people is actually very limited in size. The bigger problem is how to integrate those huge groups who do not have smartphones, are not covered by mobile phone signals, and are not covered by the power grid into the advanced online payment system. They are the real potential of India.

Because the infrastructure based on electronic mobile payment is still imperfect in Indian society, the enthusiasm for local mobile payment has gradually cooled down in India. A stationery store owner in Delhi said that at first there were five transactions using the e-wallet every day, but now there are only one or two transactions a month. “People still seem to be used to using cash for transactions,” the boss said. In Delhi's gold trading market, cash is still the main method of transaction. Indian gold and diamond dealer Earl Picarr emphasized: "I insist on using cash. There have been store robberies here, so I no longer store as many jewelry in the store as before, but I also do not accept any checks or For shopping cards, I only accept cash. "Picard believes that customers also like cash transactions because they can save payment taxes.

On November 7, Indian Finance Minister Arun Jaitley wrote on Facebook that the "demonetization order" was "a watershed in India's economic history." According to the American "Quartz" website, it is still unclear whether the Indian economy is developing in a good direction or a bad direction.