Supply chain hit as demonetization drives 70 pc trucks off India’s roads

Supply chain hit as demonetization drives 70 pc trucks off India’s roads

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Kultaran Singh Atwal, a transporter, owns seven trucks. Now, he says, he is forced to keep five of his fleet idle due to demonetisation, as he has been deprived of the minimum Rs 20,000 cash per truck per trip that he requires as running expenses.

Supply chain hit as demonetization drives 70 pc trucks off India's roads
The lack of cash flow in the markets is affecting traders and the transport sector as well, since both these businesses totally function on cash

Atwal is not an exception. There are many like him. With the government’s curbs on withdrawal of money and exchange of old Rs 500 and Rs 1,000 notes, the motor transport business is suffering, since 80 per cent of the business is cash-based.

The All India Motor Transport Congress (AIMTC) — a representative body for 9.3 million truckers, and more than five million bus operators, tourist taxis and maxi cabs — says 70 per cent of the vehicles of their members are already off the roads.

The association warns that if the situation is allowed to persist not only the supplies of essential commodities like milk, fruits, vegetables and medicines will get increasingly affected but it will also cripple the lives of 200 million people directly or indirectly dependent on this industry.

“Under the Finance Act, I’m allowed Rs 35,000 per truck per trip in cash for expenses on diesel, octroi, etc.,” Atwal, who is the Chairman of AIMTC, told IANS. “How can I survive when there is an overall withdrawal limit of just Rs 50,000?” he asks.

“The Government must hike the withdrawal limit or allow cheque-based transactions in our sector.”

Echoing similar sentiments, advisor and former President of AIMTC, Bal Malkit Singh, says: “Our operations are getting badly affected as the withdrawal limit of Rs 50,000 that we have been given is very little.”

What is happening in the process is the has been hit. “Movement of products is slowing down. Supplies of essential commodities like food, pulses or any export consignment is either getting slow or even coming to a halt in some places.”

What the truckers association has sought to drive home is that this industry contributed 4.8 per cent to the country’s gross domestic product in 2015-16, which amounted to Rs 544,800 crore. This is a little over Rs 1,492 crore daily.

With 80 per cent of the transactions in cash, Rs 1,194 crore is what the industry needs daily to sustain operations — the bulk of which is just not available today.

The fortunes of truckers is also linked to that of the trading business in India, which is facing its own set of woes. With bulk purchases in mandis almost drying up, delivery of products also becomes redundant.

“The lack of cash flow in the markets is equally affecting us traders and the transport sector as well, since both these businesses totally function on cash,” says Secretary General of the Confederation of All India Traders, Praveen Khandelwal.

“Our businesses have seen an overall drop of 75 per cent due to the demonetisation. There is a lack of money flow in the markets,” Khandelwal told IANS. “After , around 60 per cent of freight is not in movement,” says the association’s Secretary General, Naveen Gupta.

Gupta adds there is also a sharp drop in long-haul movement because, apart from diesel and tolls, all the other expenses, like the daily expenses of drivers, local taxes are also paid in cash.

“The ones plying are the short-haul vehicles, which are either running on diesel bought with leftover old currency and because there is an exemption on tolls,” Singh concludes.