Demonetization has hit hard the mostly cash-based retail businesses in India, witnessing an estimated sharp plunge of 25 per cent since the Government banned Rs 500 and Rs 1,000 currency notes, according to traders.
The Confederation of All India Traders (CAIT) – one of the largest trade associations in India, said businesses “in markets across the country has reduced to 25 per cent” since the Government announced the surprise move on November 8 night.
CAIT explained that Indian retail trade is worth about Rs 42 lakh crore annually. Retail trade per day is approximately Rs 14,000 crore per day, of which about 40 per cent trade is conducted through business-to-business ventures. The rest 60 per cent is conducted directly with consumers.
It said that agriculture wholesale markets across the country “had very less business” because farmers couldn’t sell their produce as there is no cash due to unavailability of smaller denomination notes.
“The logistic sector has come to a standstill as truck drivers have only high denomination notes, which has led to blocks in the smooth movement of transportation,” it said.
Shopkeepers and small business owners narrated their harrowing tales of cashlessness that has drastically reduced their trade. They said there were fewer buyers and those who come to purchase also carry the newly-minted Rs 2,000 currency notes.
“Some people buy items for Rs 100 and give Rs 2,000. We have to return Rs 1,900. This consumes a large number of small value currencies, which are already in short supply,” Subhash Chand, a grocery shop owner in south Delhi’s East of Kailash, told IANS.
Chand said that at this rate shopkeepers were able to sell goods to only a few people.
The Government has asked people to encourage paying through cards or e-wallets. But given the poor penetration of such facilities, it is not possible for everyone to get used to cashless transactions, he said.
Aman Thapa, who owns a small Chinese eatery in Arjun Nagar of south Delhi, said he did not have the facility to accept card payment and the cash crisis “has led to a huge decline in my business”.
“Nowadays few people are visiting our food stall. We have suffered huge losses,” Thapa said.
Abhishek Sharma, who owns a handicraft shop Rajasthan Emporium in Connaught Place, said most of his buyers used to pay him in cash.
“The fixed limit in withdrawing money has caused the ripple effect in our business as we sell handicrafts of high cost and none is coming to buy it as people do not have enough cash,” Sharma told IANS.
“This is the peak season of our business as people buy handicrafts for decorating marriage halls, houses and other places in times of marriages and festivals,” Sharma said.
But despite the difficulties he faced, Sharma welcomed the demonetization move “if it helps curb unaccounted wealth and nail tax evaders in India”.
He, however, was critical of the way the decision was implemented. The Government, he said, should have planned better and given more time to people or have circulated a large number of small value currencies to address the cash crisis.
A tea and cigarette vendor in Noida, Anil Kumar Gupta, has found a temporary solution to the cashlessness of his customers.
But it comes with a risk and possibly a price too. Gupta said he is buying goods on credit and selling them on credit as well.
“The problem is common. Everyone is suffering. I purchase on credit and sell on credit with a hope that the situation may ease very soon. However, if I don’t get returns in a couple of days, I fear I will have to shut my shop,” Gupta told IANS.