11
January 17
Says SBI
Research report
PUNE: The
government’s demonetisation exercise has hit 69 per cent of businesses in the
country’s financial capital of Mumbai, the manufacturing hub of Pune and nearby
areas. A survey conducted by the State Bank of India said “69 per cent of the
respondents affirmed that their business has been impacted”.
“Overall the decline in business is less than 50 per cent for
the majority of the businesses that were impacted. Construction sector and the
informal road-side vendors seem to be the most hit with 55 per cent and 71 per
cent respondents saying that the business got reduced by more than 50 per
cent,” said the SBI Research report.
“Varied responses have been received from the textile/
readymade garments sector and the FMCG sector. Within the textile sector,
shopkeepers dealing with retail segment have been more impacted than those in
the wholesale segment. Moreover, the wedding season has been disappointing with
sales dipping significantly compared to the last year wedding season sales. The
gems and jewellery sector has also been hit with declining sales,” the report
said.
Agreeing to this, a Crisil study said the demonetisation of
large-denomination bank notes has caused short-term disruption in India’s
economy and led us to downgrade our growth forecasts for 2017. The move has
some potential benefits, but the positive effects are unlikely to be strong or
last long enough to make a significant difference to government finances or
medium-term growth prospects, Crisil said.
“The respondents were very clear that supply of only Rs 2,000
denomination notes without intervening notes of Rs 500 has resulted in more
chaos,” the SBI report said.
SBI conducted the survey in Mumbai and Pune among different formal
and informal business groups to ascertain the effects of demonetisation on
their daily business and whether this move has resulted in increase in digital
modes of payments. A total of 175 responses were recorded and analysed, of
which 40 per cent respondents were from premier business locations of Mumbai
and remaining 60 per cent were from Pune and nearby areas. This survey was
conducted between December 30, 2016 and January 3, 2017.
According to the SBI report, the good thing is that prevalence
of digital modes of payments in chemist shops and even in case of automobile
stores has possibly resulted in only a marginal impact on their sales. Coming
to the question of shift towards digital mode of transactions, around 41 per
cent sellers already had PoS machines available even before demonetisation but
their usage has seen an increase only post demonetisation, it said. In fact, 15
per cent moved to electronic payments, viz m-wallets, PoS in the ensuing weeks.
This means that Rs 25,000 crore of cash based transactions has moved to digital
in the last 2 months.
“This number could have been even higher because the
behavioral shift has not happened yet and many merchants still prefer cash
transactions when the transaction amount is not large. So they are mostly
discouraging people to use PoS for small transaction value of say less than Rs
200 or so. Also, a number of merchants are facing connectivity issue at PoS
machines.
“But all in all, this is a good beginning. There is still some
resistance about moving towards cash-less payment systems but majority are
contemplating shifting as soon as possible,” SBI said.
“Now merchants are quite enthusiastic to adopt the digital
channels though they are facing certain challenges in the form of non/ less
availability of PoS terminals and lack of training and knowledge,” it said.
The government should thus build incentives for banks
investing in creation of card acceptance infrastructure by deploying PoS
terminals/creating acceptance points, it said.
“We would suggest the government to very quickly take on board
new merchants, particularly small and marginal traders, grocery shops, etc on
digital platform by a more targeted approach. This could be incentivised and
the same can be met by support funds from government,” it said.
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