Demonetization In India - A Foresighted Move Or Financial Sucide - By Shivam Gupta

Whereas, large value commodity items such as precious metals saw a sudden surge in demand since it attracted a lot of black money floating in the market. Money hoarders wanted to launder their money in the easiest convertible commodity hence gold prices surged immediately after demonetization.

Although, the long-term effects of demonetization move are yet to be seen but long term demand for necessary small value items like groceries, salt, sugar, pulses etc. would stay inelastic whereas high-value items such as real estate, gold etc. might be impacted. One more positive impact of this move will be that around Rs 3 Lakh Cr would come back into the banking system and hence RBI liabilities will reduce. This money can be used to pay off bad loans of farmers and the marginalised class or used to give them indirect benefits.

My economist sense of mind tells me that despite the hue and cry from the opposition and some section of media, India is set to gain in a longer run but only time will tell how public opinion shapes out which depends on hardships which they are facing now.