Idea of demonetisation itself wrong and incorrect to blame only its execution, says Rajiv Bajaj

With the adverse impact of the note ban continuing to hamper the two-wheeler sales, Bajaj Auto managing director Rajiv Bajaj on Thursday said the idea of demonetisation was itself “wrong” and it is incorrect to blame only the execution side of it.

“If the solution or the idea is right, it will go like a hot knife through butter...if the idea is not working, for example demonetisation, don’t blame execution. I think your idea itself is wrong,” Bajaj said at the annual Nasscom leadership forum.

Prime Minister Narendra Modi had on 8 November last year scrapped all the Rs 500 and Rs 1,000 notes, with a view to check the black money. Massive cash rationing was introduced as the new replacement notes were in short supply.

Rajiv Bajaj, Managing Director, Bajaj Auto. Reuters

The ban on 86 percent of the total currency worth Rs 15.55 trillion in circulation impacted economic activity across sectors with the consumption-driven ones being the most affected. Notably, the two-wheeler sales are yet to recover from the impact of demonetisation and industry data releases over the last two months have been showing a slump.

The industry was looking forward to better sales on the back of good monsoon and an acceleration in rural economic growth, which drives consumption. Bajaj Auto’s total domestic sales, including those of two-wheelers as well as three-wheelers, were down 16 percent to 1,35,188 units in January from 1,61,870 units sold during the year ago period.

For December, when the cash crunch was the highest, Bajaj Auto saw its domestic bike sales contracting by 11 percent at 1,06,665 units as against 1,20,322 units in the same month a year ago. Industry body SIAM had said in November that two-wheeler sales were at 12,43,251 units as against 13,20,552 in the year-ago month, down 5.85 percent.

Motorcycle sales were also down 10.21 percent at 7,78,178 as compared to 8,66,696 units in December 2015. Likewise, scooter sales, which are urban-centric, were also down 1.85 percent at 3,88,692 units as against 3,96,024 units in November 2015.

Before demonetisation, the two-wheeler sales in October were up 8.72 percent at 18,00,672 units as compared to 16,56,304 units in the year-ago month. Motorcycle sales were also up 7.37 percent in October 2016 at 11,44,516 units as compared to 10,65,925 units in October 2015.