Effect of Demonetization on Self Help Group: A Studyon Odisha
1. Dr Giridhari Mohanta, 2. Ms. Manisha Seal, 3. Dr Shwetasaibal Samanta Sahoo, 4. Mr.
Mukunda B. G
1Assistant Professor, FMS, Sri Sri University, Godi Sahi Cuttack, Odisha
2Assistant Professor, Dept. of Tourism and Travel Management, Jyoti Nivas College Autonomous, Bangalore
3Assistant Professor, FMS, Sri Sri University, Godi Sahi Cuttack, Odisha
4Assistant Professor, Dept. of Tourism Studies, Indian Academy degree college - Autonomous, Bangalore.
Abstract
This paper reports the experiences of SHG (Self Help Group) inCuttack and Khurda districtsof Odisha after the demonetization of Indian currency in November 2016. Initially demonetizationfaced significant criticism after its implementation with regard to currency notes. In this regard using purposive sampling method, 50 responses from SHGs were collectedfrom the study areas through a structured schedule, over a period of six months and analyzed by using relevant statistical tools like ANOVA, Chi-square test, Correlation etc.The paper reveals attitude of the respondents as well as challenges and benefits with regard to demonetization. Further study depicts that respondents are happy with the change for its diverse benefit like security, portability, time saving in counting, convenience and easy comparability. Finally,study concluded with imperative suggestions for the benefit and development of economy.
Keywords:Demonetization, Self-Help Group (SHG), Attitude, Challenge, Benefit Introduction
The Self-Help Group is a voluntary association of those people who are in need of small funds to establish and promote their small enterprises. The Self-Help Groups have been conceived in the form of savings and credit groups, joint farming groups, social forestry groups, horticulture groups, traders’ groups.Self-Help Group is a self-managed institution of 10-20 members, based on common interest and affinity for socio- economic improvement of its members. SHGs are bound by mutual trust, respect and affection and support each other. The main objective of the Self-Help Group is to provide economic opportunities to the economically deprived groups and facilitating in improvement of their entrepreneurial ambitions. It should be clearly understood that the Self-Help Group is a small organizationconsisting of few people with defined objectives and believes on the principle that small efforts can be translated into bigger power (Manisha, 2016). SHGs are trained by NGOs and that boosts their confidence and play a vital role in social change (Mehta, Mishra &Singh, 2011).
A series of currency will not be acceptable as valid currency after demonetization and on 8th November 2016, Government of India announcedfor its implementation. As a result, it had created a chaotic situation in the economy and in the minds of SHGs too. However, the main intention behind demonetization in India was to tackle with black money, corruption. Demonetization effect was seen in the economy in the form of money circulation, overall demand-supply in consumer goods, real estate property, gold and luxury goods, automobile industries and other sectors in India (Ajitomghyan, 2018).
Review of Literature
Demonetizationremovedsmooth money circulation in the market and that resulted very low cash balances in the economy and created much challenges in financial transactions in the market as there is no or not enough medium of exchange available in Indian financial system. Since income and consumption are intrinsically related to transactions in the economy, the above would mean a severe contraction in income and consumption in the economy. This effect would be more severe on individuals who earn income in cash and spend it in cash. To a lesser extent it would also affect individuals who earn income in non-cash
2219 forms but need to withdraw in cash for consumption purposes (Kabita et al., 2016).
Arvind Virmani, a Leading economist; Former India’s representative at IMF; Former Chief Economic Adviser, GOI has agreed that it would have a negative impact on the small businesses.How it requires a deeper study, but the first thing one should know that when you demonetized such a large proportion of currency, the immediate effect is a collapse of retail trade in goods and services. He further mentioned adding to this effects that how quickly you replace the transaction demand. He said the currency needed for everyday transactions have to be replaced quickly. The longer that is delayed, the more the negative effect (Radhika Iyengar, 2016).
This one decision that has ensured that a lot of money has come into the banking system, a lot of informal savings have become formal now, and therefore, the tendency to invest these more formal savings in instruments that you keep an eye on is also increasing. In recent time our confidence itself in managing the Indian economy has been increasing. The entire system has been trying to encourage ordinary citizens to channelize their savings into the market which indirectly would then contribute to the process of national development rather than be blocked only in dead assets (Dhoot , 2016).
The economic turmoil has been compounded by the fact that the government didn't print a sufficient amount of the new bills, lest word leak out as to what was about to take place. The new bills are also a different size than the old ones, creating a huge problem with ATMs. Even though India is a high-tech powerhouse, hundreds of millions of its people live in dire poverty. Many workers are leaving the cities to go back to their villages because so many businesses are closing. Countless companies are having difficulty meeting payroll, as they can't get the cash to do so. The real estate market has crashed. India's economy is based mostly on cash. Moreover, much of it operates informally because of excessive rules and taxes. The government bureaucracy is notorious for its red tape, lethargy and corruption, forcing people to get by on their wits (Forbes ,2016).
This studyconcentrates on the challenges and the benefits with the introduction of the new 2000 rupee in November 2016. The study looks at the challenges after the introduction of the new 2000rupee and the prospects thereafter. The targeted population for the study is the SSG woman of Cuttack and Khurda district of Odisha. This category of the public was chosen because their economic activities are commerce based exposing them to regular use of money and they form a fairly significant bulk of the semi-illiterate and illiterate populace with whom the very introduction of the new currency is a source of worry.Even though the new 2000 rupeewas perceived to be beneficial to most citizens, this study attempts to evaluate the challenges and the prospects of the introduction of the new2000 rupee as used by the ordinary woman in rural areas.
Objectivesof Study
The main objective of the study is to find out the challenges and the opportunitiesthat SHGs confrontedwith the introduction of new currencies. And, the other objectiveis to identify the problems and benefits that SHGs met due to demonetization.
Research Questions
The research aimed at answering the following questions:
1. Are there any challenges on the usage of the new 2000 rupee note?
2. What are the benefits of the new 2000 rupee note to the urban market women?
Methodology
Primary data were collected from SHGs membersthrough scheduled method and for this a structured questionnaire was designed consisting of ten questions.The questionnaire was divided into two parts: the first part includes close-ended questions on five demographic variables (living locality, age, education, income and occupation) and the second parts consisted of five questions relating to demonetization and its effect on the economy. Further, secondary data were collected from various published research journals, articles, books, reports and relevant websites for better understanding of the subject.Using purposive sampling method 50 responseswere recorded over a period of six months from February 2017 to July 2017.
Statistical Tools and Techniques Used:In order to make betteranalysis both descriptive and inertial statistical tools like chi-square test, ANOVA, correlation, mean, averageare used to measure the demonetisation effect and their reaction towards it.
Result Discussion
The following table-1 shows the cross tabulation between age and education. It is found that the qualifications of majority SHG women are Higher Secondary and they are capable of providing information regarding demonetization.
Table 1: Cross tabulation between Age and Education
Total Secondary
Higher
Secondary Intermediate Degree Postgraduate
Age 20-29 1 1 1 0 0 3
30-39 9 8 4 0 0 21
40-49 5 14 1 0 0 20
50-59 1 2 0 1 1 5
60 and
Above 1 0 0 0 0 1
Total 17 25 6 1 1 50
Source: Own
Table-2 shows the cross tabulation between Marital status andthe place where they keep the new currency notes. It isobserved that majority of the SHGs women keep note in purse and 50% of married women are more interested in keeping new notes in their purse rather than keeping in any other places.
Table-2: Cross tabulation between marital status and place holding money
Total
Purse Bag Other
Status Unmarried 12 2 0 14
Married 25 10 1 36
Total 37 12 1 50
Source: Own
From table-3 it is seen that majorities of respondent who are in the age group of 30-39 and 40-49 belief that with the introduction of 500, 100 and 1000 rupees note could solve liquidity problem relating to currency notes and would smoothen the currency circulation in the economy.
Table-3 Cross tabulation between Age and Introduction of New Note
Total
Rs. 100 Rs. 500 Rs. 1000
Age 20-29 2 1 0 3
30-39 3 15 3 21
40-49 2 13 5 20
50-59 2 3 0 5
60 and Above 0 1 0 1
Total 9 33 8 50
Source: Own
Testing of Hypotheses:
H0:All age groups are in equal opinion towards newnotes.
2221 H1:All age groups are not in equal opinion towards new notes.
Table-4: ANOVA (Respondent Opinion and Perception) Sum of
Squares df Mean Square F Sig.
Perception &
Product
Between
Groups 3.454 4 .863 .637 .639
Within Groups 61.026 45 1.356
Total 64.480 49
Perception &Use Between
Groups 1.168 4 .292 .716 .586
Within Groups 18.352 45 .408
Total 19.520 49
Perception and Influence Business
Between
Groups .894 4 .223 .540 .707
Within Groups 18.626 45 .414
Total 19.520 49
Source: Own
Table -4 shows the analysed output with regard to introduction of new notes and observed no significant difference in opinion as p-value is more than 0.05, which implies equality in opinion between the means of the groups. Furtherrural women feel proud for the new rupees note and in the same time they opined that due to these new notes they face a lot of problems in money circulation due toits illiquidityfeature in the early stages.Similarly, they have pointed out some practical issues relating to the 2000-rupee new note in the early stages like difficult to find out counterfeit notes which broughtilliquidity problem in their day-to- day transaction. They also faced difficulties in converting their existing old notes into new notes.
Table-5: ANOVA (Benefit of new note to SHGs) Sum of
Squares df
Mean
Square F Sig.
Benefit _Security Between Groups 1.565 4 .391 1.824 .141
Within Groups 9.655 45 .215
Total 11.220 49
Benefit_Portability Between Groups 3.798 4 .949 1.392 .252
Within Groups 30.702 45 .682
Total 34.500 49
Benefit_Comparison Between Groups 6.842 4 1.710 1.023 .406
Within Groups 75.238 45 1.672
Total 82.080 49
Benefit _TimeSave Between Groups 2.368 4 .592 1.150 .345
Within Groups 23.152 45 .514
Total 25.520 49
Benefit_Convenience Between Groups 9.204 4 2.301 1.203 .323
Within Groups 86.076 45 1.913
Total 95.280 49
Source: Own
Table-5 shows the benefits of new notes to respondents and observed no significant difference in opinion as p-value is more than 0.05, which implies equality in opinion with regard to benefit. It gives them diverse
benefit like security, portability, time saving in counting, convenience and easy comparability.
Conclusion and Recommendations
Whenever any change comes in the economy, a positive and negative effect is observed. In the same way it is also observed for demonetization in India. However, the sole intention of demonetization was to make a better India. Rural and urban SHGs women noted that they faced difficulties inexchanging the new currencynote of 2000 rupee in their business transactions.However, this liquidity and exchange problem is resolved with the introduction of other notes. Further they argue that this new note is giving them much benefit like security, portability, time saving in counting, convenience and easy comparability and so on.
Finally, it can be suggested that if proper care and steps can be taken to materialize the sole purpose of this demonetization then only it could bring changes to the economy. As a result, larger mass will get benefit out of it. Further government should see that other currency like 10, 20. 50, 100, 200 notes are also available in the market as per demand and requirement.
The study can be extended by taking more SHGs across the state and a comparative study can be done by taking few other sectors.
Limitations of the Study
The work is restricted to two districts of Odisha which are not sufficient to draw common conclusion.
Further it is seen that most of the respondents were not well aware of about the change as a result researchers failed to get the real information.
References
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