As the demonetization encourages the use of electronic and plastic currency, it is expected that cash transactions will reduce to a great extent in the near future. In addition to boosting tax coffers, this move is expected to share many benefits for the economy. When there is increase the cashless transaction, there will naturally be an increase in savings in financial assets and this, in turn, will be beneficial for intermediaries like microfinance companies, NBFs, digital money operator and of course banks.
A war against Black Money and Corruption:
The Prime Minister of the nation announced about demonetization during the early November 2016 as a war against corruption and black money. Many predictions started to pour in from economists evaluating the immediate and long-term effects of this move by the central government. Of course, most of them accepted that due to the ban of Rs.500 and Rs.1000 and due to the introduction of new Rs.2000 notes, there will be many hardships for people to get change. Even many other issues were faced by people in the initial days, as there were restrictions to withdraw cash from ATMs and even from banks. Even, the ATMs were not functioning properly across the nation, thereby leaving people with no other options other than visiting banks.
Old Rs.500 and Rs.1000 accepted Initially:
Understanding the hardships faced by people, the central government announced that in the health care industry, hospitals that function under state and central government ownership will accept old notes. But, these notes were not accepted by private hospitals and doctors practising from private clinics were hesitant about collecting old notes as the fee. So, health care was one of the industries that faced trouble in the initial stages of demonetization as patients were not able to get the right treatment and even relatives of patients, who were hospitalized during the time of announcing demonetization faced a lot of difficulties as they were not able to get the foods they required.
Delay in Treatment for many Patients:
Due to demonetization nearly 70-80% of door-step services in health care industry like home care and diagnostics were affected. As the patients were not able to pay the exact change for these services, they just cancelled their appointments with respect to diagnostics.
Impact in the next 2-6 months:
The old high denomination ban is expected to bring a heavy impact in the private healthcare industry in the next 2-6 months. This will be even higher in the home health care service sector. In general, these types of home care services are obtained by old patients, and they ensure that they have sufficient cash in hand to pay for these services. As they cannot visit both banks and ATMs due to long queues, they look for postponing their medical examinations if possible. Otherwise, they are left with no other option other than directly visiting the banks to withdraw money.
Once the new 500 Rupee notes are made available to the public in sufficient number and once the rush in banks and ATMs, reduce, it is expected that health care sector will get out of these troubles. Hospitals are also forced to provide card payment facility to patients such that they need not have to worry about cash availability in their hands to pay for health care services.