The Costs of Demonetisation: Workdays Cause Pain, Gold Sales Hit

A daily round-up of the human impact of demonetisation.

Queues like this are still not a rare sight. Credit: Reuters

Queues like this are still not a rare sight. Credit: Reuters

Workdays cause pain

As the tourism industry of Varanasi comes down, the self-trained photographers at the ghats have been left with little or no work. Sita Sahani has seen her business falling with the rise of the ‘selfie’ and high quality phone cameras. However, demonetisation has further affected it as she barely finds any customers throughout the day, The Hindu reported.

The pressure of printing new notes has taken a toll on the workers in printing presses around the country. The Huffington Post reported on one such instance in the state of West Bengal. A section of workers in a press in Salboni have indicated that they will not work beyond the nine-hour work shift, which is set to affect the amount of new notes being pushed into circulation. This comes with The Bharatiya Reserve Bank Note Mudran Private Limited Employees’ Association serving a notice that a number of workers have fallen ill since December 14.

Books lose their shine

Demonetisation has taken a toll on book lovers. In the Hyderabad Book Festival held this month, publishers are reporting a drastic drop in sales. Small publishers are being worse hit they haven’t been able to access electronic modes of payment, as a numbers of customers have switched to those methods to buy books. For Veekshanam, a Telugu monthly which focuses on socio-economical and political issues, sales dropped by 30-50%. “We have not compiled the final figures but there was a huge drop in sales, which should be 30-50% less than last year’s numbers,” N. Venugopal, editor of Veekshanam, told The Hindu Business Line.

Cash payments take a toll

The Economic Times published the findings of a report, which has stated that the unorganised sector will be the worst hit by demonetisation. Since it runs outside the purview of the formal economy, cash flow will be harder to revive in the industry.”The unorganised sector is expected to bear higher brunt of demonetisation. Within the organised space, a lot of industries would get impacted owing to the sucking out of daily liquidity needed to run the business,” Centrum Wealth Research said in a report.

Things are going bad for the vegetable and flower wholesale markets in Delhi. Demonetisation has led to a lower demand, which has drastically reduced prices of commodities. Sellers are struggling to even cover production costs.  The whole chain of supply and delivery including farmers, transporters, traders and vendors  have taken a big hit since the announcement. As much of the trade is done in cash, the entire chain has been affected. “There are boys that haven’t been paid. We’re trying to give salaries on time but these people are obviously suffering, the small-time loaders and vendors who don’t have bank accounts and need some cash at the end of the day to buy their food,” said Ismail Baba, a wholesale trader at Okhla subzi mandi, Catchnews reported.

The Economic Times reported how demonetisation has affected the National Rural Employment Guarantee Scheme. The welfare scheme of the government which guarantees employment for at least 100 days a year to everyone under it. The workers are being in the smaller-denomination notes daily, but they too are in short supply. Around eight states have raised the issue of the cash-crunch, which has led to delayed payments for the workers. These states include West Bengal, Jharkhand and Manipur, to name a few.

Cyber crimes on the rise

Since the demonetisation announcement, the government has been pushing to move towards a digital economy. The push by the government has also led to a number of cases of cyber crimes surfacing. These cases, which include ransomware, financial frauds and website hacking have attacked various Indian companies. The companies have reported data breaches and financial losses to go with it. Without a proper cyber-security mechanism in place, as many as 50 cases have been reported in just the last month, according to The Indian Express.

Money exchange down

The cash exchange industry is down due to the demonetisation announcement. A number of foreign tourists have cancelled their plans to India since the move. Since there is no cash available, foreign tourists here have reduced their spending and other potential tourists have diverted their plans elsewhere. This has severely affected the money-exchange business. Since the RBI imposed a restriction of only Rs 20,000 being exchanged in a day, business has come down. Money exchangers have been left struggling for cash. “Our business is completely down – we do not know when it will normalise,” Sumit Bansal, director of Ansh International, a money exchange outlet in Connaught Place, told the Times of India. “With the limit set by the RBI for weekly withdrawal, we have no idea how to run our business,” Bansal added.

Gold sales hit

Coimbatore, which is home to a large gold industry has been bearing a brunt of demonetisation. The industry consists of 55,000 goldsmiths and around 3,000 jewellery manufacturing companies. A CNBC report laid out the effect that the currency move has had on the industry. As people are increasingly strapped for cash, they have been cutting back on their expenses.

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