Demonetisation: Good in long-term, bad in short-term; trade across India down by 25%, claims trade body
With trade slowing down by nearly 25% across India, Confederation of All India Traders (CAIT) on Tuesday urged the finance ministry to take remedial measures to ensure smooth flow of currency both for the traders and consumers as well as a subsidy in electronic payment charges
In an attempt to tone down the after-effects of demonetisation, the trade sector has urged the government to take special measures ensuring smooth flow of currency both for the traders and consumers.
Confederation of All India Traders (CAIT), an umbrella body of trade and business associations, has said that as a consequence of demonetisation of high-value currency notes by the government, the commercial markets across the country wear a gloomy and deserted look.
“For the past four days since demonetisation, consumer footfall in the markets is very less in comparison to normal days. Not only retail activities, even wholesale trade has been severely affected because of low-volume of transportation of goods," the confederation said in its statement.
The trade body has urged Finance Minister Arun Jaitley to take remedial measures and suggested steps like organising special camps for the traders for disbursement of cash as well as promote adoption of methods of electronic payments.
After demonetisation, which Prime Minister Narendra Modi announced on 8 November, trade bodies in various states organised meetings on how to deal with the cash crunch.
The CAIT also claimed that after demonetisation, trade in markets across the country has reduced by 25 percent in comparison to normal days.
It is estimated that Indian retail trade is of about Rs 42 lakh crore annually, resulting in approximately Rs 14,000 crore per day out of which about 40 percent trade is conducted through business to business (B2B) and the rest 60 percent is through business to consumer (B2C) activities. Of the total retail trade in the country, 60 percent is conducted in urban areas, and the rest 40 percent in rural areas.
CAIT has also pointed out that the rural retailers from talukas and other mofussil areas, who generally visit nearby district markets for procurement of goods, had to remain in their respective places for want of sufficient funds of in acceptable denomination.
The traders operating in the Agriculture Produce Marketing Committee (APMC) and grain mandis (wholesale markets) have complained of a decline in business as farmers who bring their produce for sale in the market have been facing nightmare, as the latter fails to get payment against the produce sold.
“For the last three days after the announcement, the situation became so grave that the Bhopal Anaaj Mandi (grain wholesale market) had to remain close. There was a severe crisis as we, the mandi traders, were unable to pay the farmers as Rs 1,000 and Rs 500 currency notes were banned. But from Monday, payment facility has been made through cheques, which is a welcome move. This is a good move,” remarked a Bhopal Anaaj Mandi trader.
The traders' community also pointed out that the logistic sector has virtually come to a standstill as the truck drivers only had high denomination notes, thus causing blocks in the smooth movement of transportation. The same is with the small traders at Sunday markets and weekly haats.
“The retail market has witnessed a slowdown and it'll take at least three months to revive in full form. The Sunday markets have massively been hit, as there are hardly any customers visible. This move by the PM is commendable, but if the currency flow in the market doesn’t increase at the earliest, it'll have its cascading effect on the entire chain. The government should also instruct banks to create special counters for the traders holding accounts in respective banks for cash withdrawal," said Navneet Agarwal, state general secretary, Akhil Bharatiya Udyog Vyapar Mandal.
While urging the retailers who have direct connect with the consumers to accept high denomination currency notes from the consumers, the CAIT also emphasised on the use of digital payment. The trade body has suggested the government that the transaction cost being charged by the banks on the usage of debit and credit cards is a major deterrent in use of card payments.
"It is suggested that such transaction cost may be subsidised by the government and the banks may be advised not to charge any transaction cost," CAIT mentioned in its note to the finance ministry.
"The transaction cost being charged by the banks on usage of debit and credit cards is the major deterrent in use of card payments and as such it is suggested that such transaction cost may be subsidised by the government and the banks may be advised not to charge any transaction cost," the CAIT secretary general Praveen Khandelwal said in his suggestion to the finance ministry.
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