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A STUDY ON IMPACT OF DEMONETIZATION ON THE REVENUE OF INDIAN TELECOMSECTOR Dr. Vishal Geete
Professor, Acropolis Faculty of Management & Research 48/2 Tilak Nagar, Indore, M.P. India
Abstract - The research has been conducted with the aim to know the effect of demonetization on the revenue of the telecom sector of India. For the purpose of the study secondary data from the web site of TRAI (Telecom Regulatory Authority of India ) has been obtained for the period of 22 quarters ( 11 pre and 11 post demonetization). The data which is used of monthly average revenue per user and gross revenue. For the purpose of analysis pair t-test has been applied with the help of SPSS 20.
Keywords: ARPU, TRAI, average revenue, demonetization.
1. INTRODUCTION
In the year 2016 the government has announced the demonetization and declared that now onwards the currency notes of Rs.500 & Rs. 1000 will be illegal. The objective behind the demonetization was to remove the black money from the market and strike on the illegal use of currency. World economics history has an evidence of such kind of surgical strike by the bane of fiat currency to eradicate the black currency from the economic system. In the world history first instance is available of Britain of the year 1971, the than government has stopped pound and penny currency, the government stopped old currency and introduced new 5 & 10 pounds coin. The preparation for such change was started by government in 2 year advance hence it has not affected much to the economy as well as citizens also. In the year 1982 Ghana demonetized its 50 cedis note to control the evasion of tax and excess liquidity but the people were started supporting the black market and invested in physical asset and economy gets affected adversely. The same has been done by Nigerian government by replacing the old currency through new though the economy was not able to absorb this shock and collapsed.
Mayanmar military lead government in the year 1987 declared void its 80% of legal currency to curb black money. The decision had negative impact on economy prices shoot up, daily activities got badly affected and soon the commodities were disappeared. The another incidence took place in the year 1987 at Congo republic the country was suffering from heavy corruption, ethnic which resulted in price hike of necessary goods and stock market was not performing well. All of a sudden call of demonetization also led to the downfall of the dictator and with it came an end to the demonetization. Kim Jong II announce a demonetization to curb black economy which was very poorly planned and ultimately led to failure.
Indian economy has faced the demonetization first time on 12th January 1946, by announcing cancelling the legal tender of Rs 1000 & 10000 notes. At that time around Rs 143 crore was in circulation but only Rs. 134 crore was exchange and balance Rs 9 crore was demonetized. The attempt was futile. The second attempt was in the year 1978 the currency note of denomination Rs. 1000, Rs. 5000 and Rs 10000 were called back. Third time on 16th November 2016 by the recall of Rs 500 & Rs 1000 note.
The impact of demonetisaton of 1946 and 1978 has some significant impact, the current government was well prepared for demonetization but the demonetization of 2016 has adverse effect on the economy.
The move of demonetization was criticized by the economists all over. They have opinion that such type of measure were hazardous to the growth of country as well as economy for few year. This type of measures should be taken only when there is alternative and supporting system and plans already in place.
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2. LITERATURE REVIEWDemonetization has affected not only the lay man but also to the business man and corporate. The effect was very limited on lay man but corporate and businessman was facing it after math even today also. Roy D. (2019) it may be easily deduced that the Indian policymakers deliberately hurled the masses in one of the gravest economic crises with a clear-cut intention of creating a political gimmick, when in reality, the proportion of illegitimate money supply was not even 1 per cent of total legitimate supply of money.
Sharma C. (2019) there is significant amount of black money in Indian economy which was around 17% of GDP in last two decades after taxation and other regimes. In the last estimated year (2017), the black economy was 23,849bn Indian rupees at current market price (around $400bn), which was 14 percent of the official GDP. Demonetization will downgrade the shadow economy and reduced the tax evasion. Krishanan D. et al (2017) majority has lost their income in the month of November in spite of that they are positive about the effect of demonetization. Demonetization hardest hit to small shop owners and casual labours, out of 50 respondents 32 feels that it was not a good move, may be because they loss the inomce.iii . Sarkodie (2018) demonetization having negative impact on poor people. Alvares, Clirford (2009) fake or unaccounted money which is undetected is going to affect the Indian economy. Betz, et al (2017) concluded that the implementation of demonetization was not perfect. Muthulakshmi E it was one of the failed attempt to fix a debt burdened and inflation ridden economy. Kandpal H. et al (2019), concluded that retails sales and trade has got severely affected by the demonetization, there is a recovery but actual recovery will depend upon the devising substitutes of cash payements. Koshi (2017) demonetization has severely affected the unorganized retailers. Bhardwaj, R. et.al(2018) concluded that the impact of demonetization is temporary in nature on the stock market and investors tend to look towards plastic or digital money. Goel S (2018) implementation of demonetization has mixed outcomes with its own challenges and improvements.
Kushwah H. et al (2018) there will be positive impact of demonetization on Indian economy in medium to long term, it also encourages digital payments and online payment modes with the use of E-banking. Nerkar D. A (2016) demonetization alone cannot fight parallel economy and eliminate black money. Several other measures are required by the government to change the economy for good. Natrajan G (2017) the impact of demonetization was neutral, initially the economy was suffered and informal sector was get affected but there will be positive effect of it also. Joshi, et al. (2017) there is not much effect of demonetization on retails though initially they faced cash crunch but very adaptable to plastic and online payment system. Yadav, et al (2019) the government has to employ in time all other pertinent measures in an exigent mode to make the cash ban a grand success. Overall impact of demonetization is neutral. It has initially affected the common man but after the few months when new currency was available than the life is on track.
3. METHODOLOGY
For the purpose of the study secondary data has been collected from the reports of TRAI which is available on the website. The yearly and quarterly key performance indicator report is down loaded and Average Revenue Per User and Total Revenue figures were considered.
The period considered for such study is in two mode one is quarterly and other one is yearly for pre and post demonetization, i.e. from November 2015 to September 2016, 3 quarters of pre demonetization and from Jan 2017 to September 2019. Total Sample size was of 11 quarter. The secondary data has been collected from the web site of TRAI.
For the purpose of statistical analysis paired t-test has been applied and following hypothesis has been formulated
H01 There is no significant difference in the mean value of Pre demonetization monthly ARPU and post monthly ARPU.
H01a There is a significant difference in the mean value of Pre demonetization monthly ARPU and post monthly ARPU.
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H02 There is no significant difference in the mean value of Pre demonetization monthly and post demonetization Revenue.H02a There is a significant difference in the mean value of Pre demonetization monthly and post demonetization Revenue.
4. RESULTS
Table (i) Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Pair 1 PreMARPU 77.5509 11 6.64668 2.00405
PostMARPU 124.7273 11 7.12869 2.14938
Pair 2 PreRevenue 37968.4545 11 2133.81332 643.36892
PostRevenue 46238.6364 11 3537.63834 1066.63809
Table (ii) Paired Samples Correlations
N Correlation Sig.
Pair 1 PreMARPU & PostMARPU 11 -.633 .037
Pair 2 PreRevenue & PostRevenue 11 -.388 .239
Table (iii) Paired Samples Test
Paired Differences t df Sig. (2-
tailed) Mean Std.
Deviation Std.
Error Mean
95% Confidence Interval of the
Difference Lower Upper Pair
1
PreMARPU –
PostMARPU
- 47.176
36 12.44837 3.75333 -55.53929 - 38.81343
- 12.56 9
1
0 .000 Pair
2
PreRevenue –
PostRevenu e
- 8270.1 8182
4787.9034
6 1443.60 721
- 11486.739 13
- 5053.624 51
- 5.729 1
0 .000
From the above statistical result and table number 3, it results that hypothesis H01 rejected and alternate hypothesis has been accepted which says that there is significant difference in the mean value of pre and post demonetization ARPU (p=0.000).
The other result also reject the hypothesis H02 and accept the hypothesis H02a which states that there is a significant different in the mean value of pre and post demonetization revenue (p=0.000).
5. DISCUSSION
The average monthly revenue per user and gross revenue of telecom companies is increased after the demonetization. Hence we can say that the number of user must have increased and the use of data per person is also increase due to cheap availability of the data. Apart from that some unlimited plans were also introduced.
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6. CONCLUSIONThere is lot of talks about the effect of demonetization around. From the end of year 2016 to till date it’s a buzz word among the businessmen as well as layman. Every one blames the demonetization for reduction in profit, sale or etc, but the case is not so. Even in the same time after 6 months of demonetization, another concrete decision of GST has been take by government even it has also not affected the telecom market adversely. The results are just opposite of the others. The monthly average revenue per user is increase in comparison to pre demonetization(mean=77.55 ) period to post demonetization period (mean=124.72,table (i)). Same is the case for Gross revenue. The gross revenue has also increase in post demonetization period (mean=46238.6364) as compared to pre demonetization period (mean=37968.4545, table (i)). Even though there is a negative significant correlation between pre and post demonetization of average revenue per user (r= -0.633, p=0.037) and gross revenue (r= -0.388, p=0.239). Finally it can be concluded that there is no negative impact of demonetization on the revenue of telecom sector in India.
REFERENCES
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Webliography
i. http://economictimes.indiatimes.com/news/economy/indicators/eliminating-shadow-economyto-have- positive-impact-on-gdp-arun-jaitley/articleshow/56363833.cms.
ii. https://www.epw.in/node/148264/pdf,%20http://blogs.lse.ac.uk/southasia/2017/02/28/reviving- theinformal-sector-from-the-throes-of-demonetisation.
iii. https://thewire.in/economy/demonetisation-four-areas-delhi.
