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Analyzing the Impact of Demonetization on the Education Sector

/Analyzing the Impact of Demonetization on the Education Sector
ISBM University Blog

Analyzing the Impact of Demonetization on the Education Sector

Recently, the Indian Government announced a demonetization. Prime Minister Narendra Modi created a hustle in India by removing the highest currency denomination. Demonetization has taken place several times in our country before this in the years 1954 and 1978 respectively. However, the impact that the latest demonetization, (announced in the month of November 2016) created was a holistic one. This action was taken to combat black money and printing of duplicate currency which was a major funding source for terrorist activities. In the past few days, we all witnessed the fiscal effects of demonetization on our economy along with which it has also created a huge ruckus in all the sectors essential to run the Indian economy. As far as the education sector is concerned, institutes that are collaborated internationally may face less adversity than local and privately owned institutes comparatively.

I came across these immediate impacts on the education system caused due to demonetization:

Education in itself is a practice of imparting righteous thoughts of humanity, yet the industry has not remained unaffected by various forms of corruption. After the recent demonetization, the education sector has undergone both positive as well as negative changes.

  • As a result of demonetization, students planning to go for higher studies in India as well as abroad will be offered bank loans at a more reasonable rate. This is great news for students belonging to economically backward sections of the society who have been lagging behind due to high interest rates charged on education loans by banks and private institutes.
  • The Real Estate sector has been affected the most by demonetization which is why investors are showing a keen interest in education sector (schools and colleges).
  • There will be sheer transparency as schools, colleges and private institutes will be accepting fees through online banking transfer, Checks or DD’s and not in cash.
  • International organizations will be interested in Indian schools and colleges thereby creating employment opportunities and improving the quality of education.
  • Education institutes still following old teaching techniques and payment modes will now get digitalized.
  • Cash flow for research activities has been kept on a hold for a brief while.
  • Giving and receiving bribe for the purpose of admission will definitely diminish if not get eradicated completely.

Followed by the education sector, the job industry has also faced drastic changes after demonetization.

  • Startups and E-commerce have hugely benefitted after demonetization. With the effect of demonetization, business enthusiasts are making the most of this opportunity to generate revenues.
  • Demonetization was announced during peak festive season, as a result people rushed to make purchases. With this step, there was a leap in digital shopping.
  • E-commerce businesses have flourished within just a few years; hence, it is assumed that there will be an increase in the hiring of employees containing knowledge pertaining to the digital world in the near future. Demonetization will lead to increased employment avenues which will further give rise to a demand of gateway, POS machine sellers, security professionals and many others.
  • There is an estimate growth in IT/Telecom, FMCG and Pharma, indicating more number of employment opportunities.
  • Education and jobs are amongst the many other sources responsible for the growth of our country’s economy. If these two sectors flourish, then India will surely reach great heights of success in the coming years.
  • E-commerce extensively profited due to demonetization but this was not the similar case with the manufacturing and auto industry. In rural areas, equipment’s whose purchase requires capital in hand have faced major challenges.

Reasons behind demonetization:

  • Reduce the flow of unaccounted cash from the economy.
  • Fight counterfeit currency.
  • Put a full stop to criminal and terrorist activities that are carried out with such currency.
  • Combat price rise, GDP, ransom, inflation, black money and corruption.

It is believed that the limited access to cash these days will force Indian buyers and sellers to utilize the cashless payment gateways. Since the announcement of demonetization, there has been a great hike in credit card and debit card transactions.

Every ecosystem runs on one vital asset that is money. Free flow of capital ensures smooth functioning of the workforce. Similarly, the education sector also majorly depends on monetary resources to function effectively. There are multiple components to these assets in the form of tuition fees, admission fees, and transport charges to name a few. One of the fundamental advantages of demonetization is that it has enabled backward class students to apply for education loans at lower interest rates.

The overnight removal of Rs 500 and Rs 1000 currency notes particularly impacted the part of population that had been indulging in illegal ways of earning money and promoting the practice of terrorist activities in the country. The roots of corruption have widespread across the country which cannot be heaved overnight. Many experts believe that demonetization will gradually be helpful in erasing corruption if a certain amount of consistency is maintained by all of us in following the rules set forward by the Governing bodies.

Demonetization of 2015 was regarded as one of the most breakthrough decisions so far in the history of Indian economy. People have strongly raised their opinions both in support as well as against demonetization. Students really need to focus on this development and pay close attention to every move as there are high chances that they could be asked about it in their examinations.

The increased use of capital for purchases will raise the collection of tax by the Government. This additional tax collection will be then used for the betterment of the public and will be spent on public infrastructure, salaries of teachers, educational means, etc. This one step taken by the Government will wipe out all the shortcomings that our economy has been facing and change the overall face of the Indian economy.

Where many were in support of demonetization, many even criticized the big decision to the core. As of now, what we can do is just sit back and watch things unfold. Whether demonetization will benefit our economy or affect it adversely in the future, only time will tell.