Studying effects of demonetization on start up companies

Demonetization – who in India does not know about it! It can be defined as the Prime Minister Narendra Modi’s drastic step to fight corruption and fake currency market in which he withdrew the use of notes of Rs. 500 and Rs. 1000. There is no doubt that there will be a slight inconvenience because of this step, it is quite evident now. At the end of the day Indians are happy that something is being done about the black money business.


Modi government has been extending great support to the entrepreneurial community and has been bringing new ways to support the ecosystem as a whole every possible way. Founder of ShopClues and Droom, Sandeep Agarwal says, “Modi government continues to adopt innovative and feasible way to eradicate black money and move India to 21st century nation. The demonetization of currency notes is a bold step in a positive way and a great move in the direction of weeding out black money. Not only will this move bring transparency in the system but will also control the menace of fake currency notes which has been increasing in numbers. After supporting startup,  giving impetus to digital economy,  this is another step for India to be at par with other great nations of the world”

Studies say that the drastic move to demonetize currency notes of high value will lead the transition towards a less-cash economy, thereby helping compliant SMEs to pursue higher growth. Due to enhanced and higher traceability, the step will prove to be directing towards strengthening the formal economy.

Demonetization made companies like Paytm, Mobikwik and FreeCharge happy, which enable online money transactions, took it as an opportunity to promote themselves. Payment platforms like Mobikwik prompted users to go online and encourage their friends to use the app and save panic. Free charge called it a great move, promting a tagline, “Trash the Cash- Just freechage!”

Start ups and entrepreneurs are welcoming the bold move by our Prime Minister, though there is a big challenge when it comes to salaries, payments or even receiving payments in many cases. Still everyone seems to feel this move will curb the corruption that has been prevalent in our nation. No matter how many problems the start up community is facing, there is practically no option other than to deal with it. Start ups, being small scale businesses involve smaller amounts of money, which is actually a boon in the present scenario. Every change has its own set of pros and cons, best way to deal with them is to extract the best out if every given situation.



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