November 8, 2016. To residents of India, it was the day of the shocking announcement by Prime Minister Narendra Modi that dealt with demonetization. But to me, a resident in the United States of America, this day was all about the Presidential election and the victory of Donald Trump. In the wake of the election of President Trump, I paid no attention to the outside world.
Only as I started preparing for my trip to India for Christmas break, did I first hear the word "demonetization". I came to find out that PM Modi had suddenly decided to invalidate some common, large denominations of the rupee. This came as a complete shock to me. Living in America, I have never thought that any country could or would abruptly change the accepted bills.
Upon arriving in my family's flat in Mumbai, India's equivalent of New York City, my aunts and uncles began to tell me about demonetization and the effects they have each felt. They complained about the fact that the banks have run out of money to exchange and whichever ATMs have the new denominations, the lines are unbelievably long. But they were also keenly aware of the intentions of PM Modi. Though they, and fellow Indians, had been put in an uncomfortable situation, they understood that it was for the greater good of the country and that it would, hopefully, uproot the black market money and counterfeiters, disrupt and prevent terrorist financing, and would force residents to start paying taxes.
In spite of the tedium for the government to mint enough new 500 and 2000 rupee notes and the hassle for people to find banks that could exchange the money, it has and will help the developing economy of India. Corruption and infrastructure seem to be problems in India and the demonetization efforts by Modi seem to be good first steps to solving these problems by taking out cash from the black market. This will also help transition India's cash economy to a cashless one, like the one I see at home in America, and would directly have a positive impact on the India's GDP.
As an economics student, I was intrigued by and understood Modi's actions, but walking through Mumbai I could not fathom how the residents and businessowners had so easily adapted to the situation. But as I wandered the streets of Mumbai with my cousins, I noticed a transition to a cashless economy. I saw small businessmen helping out their customers by creating IOU logs and telling them to pay once they reached 2000 rupees because of a lack of cash for change. I even saw small market stall owners using credit card machines in an effort to adapt to demonetization.
Pivotal is the only way to describe this. The resiliency of the citizens enables PM Modi to achieve his goals and it brings India and its economy one step closer to becoming a first world country.
Written by Rhea Sali. High school senior and aspiring economics major from New Jersey, USA