Despite strong fundamentals, Indian economy has, gradually, been slowing down, more so since demonetization in 2016. The demonetization of Rs. 500 and Rs. 1000 currency notes soaked the entire liquidity in rural India. More than 40 percent of India's GDP is run on cash. As much as 68% of transactions in India are cash based. Though demonetization to some extent forced the rural population to open a bank account, yet the major mode of transaction,by and large, remained as cash. Almost every Indian farmer depends for instant cash on moneylenders.
It is the inescapable cycle of debt which continues to grip rural India, even today, notwithstanding the expansion of banking. The rapacious moneylender, extending hassle-free lending process, is an inalienable part of a rural family. The moneylender is the most dependable source of cash in distress situation and needy ruralite makes first call to him.
Accordin to surveys, 85 per cent of farmers owning less than 0.1 hectares land,owe huge debt to informal finance sources, chiefly to moneylenders. Apart from farmers, business men and traders also rely heavily for credit on moneylenders.
Demonetization tore apart this source with no dependable alternative in place. On the other hand, people had to struggle to get their money from banks.It only eroded people's confidence in banking.The hurriedly implementation of GST added to the businessmen problems.
The liquidity crisis in rural India has weakened the demand since then. If demand is weak, there is limited capacity utilization. Ultimately, weak demand soaks employment avenues. And this has been happening post-demo since 2017.
One of the big faults with our leaders is that the they are not ready to accept the wrong doings and hear sane voices. The present dispensation is avowedly averse to even health criticism. Intolerance, lack of creativity and hatred only obstruct growth.
Unless and until, we have a free flow of ideas, services and men power, Indian economy will not be able to fast-track. After all, in a fast-growing economy every citizen contributes his mite to GDP.