When quizzed about the effects of Demonetization, Team Fortunestreets got a very interesting response from KS Chandrashekar, the founder of Partham, an upcoming real estate company to watch out for. Demonetization explained through an interpersonal communication between two friends.
One Year of Demonetization
A friend asked – how do you feel after one year of demonetization?
Me – I said I’m feeling much better after so many years of illness. I was seriously ill for so many decades and finally the doctor found the right diagnosis last year. The medicines have been very effective and I have improved a lot.
Friend – What the hell are you talking? I am asking you as to how you feel after one year of demonetization and you are talking about your health. How is this connected to my question?
Me – I explained to him – during the last few decades, we have been thriving on an economy where maximum population used to undertake cash transaction. By doing so they had conveniently avoided the tax net. But their lifestyle was luxurious and they enjoyed a blissful life without paying a single rupee in direct taxes to the government. Therefore the entire burden of development cost was being put on the shoulder of a middle class salaried person who paid the tax regularly; and without whom the economic survival of our country would have been difficult. But even a cow gives milk only up to a certain time; thereafter if someone tries to milk it forcibly then the cow’s health gets deteriorated. Exactly the same thing was happening with the middle class of India prior to demonetization. Now since the government has properly diagnosed the health of the economy and there have been improvements in all areas during the last one year, the tax net has broadened considerably. This translates to more money for core infrastructure development. More infrastructure means better quality of life. This is the change which has happened in the past one year and it will further improve. There are several other changes which have happened in specific sectors which will take lots of time to explain.
Friend totally aghast! – “Oh My God” I never realised. Lol! But can you please explain how it impacted in real estate market?
Me – With reference to real estate, only demonetization should not be considered in isolation. Additional steps taken by the government by way of RERA and GST also needs to be factored in. All three go hand-in-hand, if one wants to analyse real estate sector.
Friend – How, please explain?
Me – RERA has brought transparency, Demonetization has reduced cash transaction and GST has reduced the costing. Now you see how it goes? The common man has gained due to reduction in cost of the apartments. There are now genuine retail buyers. Government has gained by widening their tax base. In short, this is the impact.