Free Press Journal

Recommendations pouring in to ease pain of demonetisation


In an effort to ease transition phase following demonetisation and counter slowdown as well, representatives and industry bodies are coming forward with several recommendations.

“According to the feedback received (from the industry), members indicated that during the transition period there will be some impact felt on their performance,” says Federation of Indian Chambers of Commerce and Industry (FICCI), praising the government. To ease this, the body stated that the cash withdrawal limit for the crucial agro based sector be enhanced to enable the supply chain to restart and restore the economic activity.

Meanwhile, Lalit Gandhi, chairman of Western Maharashtra Chamber of Commerce, Industries and Agro Education (WESMACH) expressed discontent at the way the situation unravelled. “We are expecting the situation to improve soon. But if it is prolonged, then it will take more than a month for Micro Small and Medium Enterprises to recover,” Gandhi stated. Non-durable consumer goods like fruits and vegetables are getting damaged as transportation is in standstill, Gandhi stated. On the other hand for Micro Finance Institutions, FICCI believes lifting the cap on cash withdrawal for MFIs and leveraging the MFI network for withdrawal of the demonetised currency / issue of fresh currency in the sector, is consider critical.

Yet another body, the Indian Texpreneurs Federation (ITF) in a letter to the Textile ministry asked the ministry to help them during the slow down. ITF, secretary, Prabhu Dhamodharan told The Free Press Journal, “In the month of December- January, there will be a slowdown in retail side.” The sector was looking for some practical help from the Centre due to low spending, consumption was taking a hit and the retailers naturally were reducing the purchases, which was affecting the manufacturing in terms of poor off take of yarn and fabrics from the buyers, Dhamodharan added.

When domestic market is hit, Dhamodharan believes the sector should be allowed to export under the Merchandise Export from India Scheme (MeIS), which will allow the sector to cope with the slow down. Dhamodharan also stated there are international enquires. Gandhi also agreed up on the restricted activity for MSME sector in the domestic market. “However, export activity is taking place as usual as these transactions are mostly done digitally,” stated Gandhi.

Reiterating demonetisation as a welcoming move, All India Gems & Jewellery Trade Federation (GJF) chairman Sreedhar GV said that the sector has witnessed 80-85 per cent fall in business, post demonetisation. However, Sreedhar is optimistic that demonetisation is for the better future. Commenting on digital transactions in gems and jewellery, he said. “It has been picking up. We have seen change from cash to digital mode of payment.” He revealed the ratio for cash to digital transaction in the sector stands somewhere between 30-35 per cent (digital) and 70-65 per cent (cash).