In a decisive battle against black money, Narendra Modi government yesterday announced the invalidity of the legal tender of Rs.500 & Rs.1000 preceded by the release of Rs.2000 currency notes. This ruling will have far-reaching consequences on the Indian economy in both short and medium term.
Small Businesses both in urban & rural areas will feel the heat as these are mostly run via cash transactions. Also with the rise in NPA banks will be averse to fund these businesses even for a short period of time. Businesses with cash transaction will now have to rely on funding from other sources and might end up paying a lot more.