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The Din's effect (Part-I): Effect of high value notes demonetisation- Analyst: Ajmer din (CA-final, B.com (h))

1. For initial days: Since more than 80% Sales use to be with Cash therefore overall sales is likely to decline by 30%-40%.

2. People will try to not to utilize accounted money in upcoming days because they will try to find solutions to utilize cash lying with them.

3. It is worth to note that the amount of cash lying with general public is certainty of insignificant amount if compared with industrialist and business man therefore the trade which used to happen amongst them will now get tougher until the situation stables i.e. a major hit will be on Indian economy in initial days (it may have direct impact on GDP growth rate of upcoming quarters but that will be compensated to some extent with deposits done by people with bank during these days because a major portion of such money will be invested by bank. “Principle of Saving is saving economy”)

4. Carrying cost of stock and Woking capital blocked for even one day affects a lot of loss to such business units individually.

5. Positive effects will be resulted from Decrease in demand and high supply; things will get cheaper in upcoming time.

6. Companies are likely to come with policy of high discounts on selling items through online channels to level up the lower demand.

7. Interest rate from banks is likely to get reduced, because now since everyone will deposit substantial lot of cash with bank and there will be no more less availability of liquid amount.

8. However, it is substance to note that individual spends more when they have money of lower denomination and to self-control the likelihood of spending more, they usually like to acquire money with higher denomination.

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