Published On : Sun, Nov 13th, 2016

As Nagpur Scrambles For New Notes, Cash, And Patience, Runs Out

10bank2Nagpur: Queues grew longer outside banks and ATMs across the city on a Sunday as cash-starved people scrambled to exchange and withdraw money for the third consecutive day. Minor incidents of violence were reported from several areas as banks struggled to dispense cash. The retail market is badly hit because of the demonitisation of the 500 and 100 currency notes. Even the issuance of the 2000 notes has not enthused the market.

Most of the retailers do small and medium cash transactions through the day. After the decision, the business has come to a stop. The retailers are unable to pay the distributors, the distributors do not have enough small denominations to pay the producers and the consumer does not have enough currency to pay to the retailer. This has affected the chain completely.

The retailers are saying that the businesses simply could not run in the present situation. “Since the business transactions of small traders is not much, the share of digital transactions is not substantial. Almost 70% of our payments come in higher denominations. The government may take a lot of time to replenish banks with new notes. Right now the banks are concentrating only on exchange of old currency. Normal functioning of banks has taken a hit because of the policy changes” said Chandan Goswami, a market analyst while talking to local media. That is why there should be some remedial measures for us. Since the retailer provides the last mile connectivity for all essential goods, it is important that he is allowed to accept old currency. Or else, we stand to lose a lot because of the economic churn,” said a trader.

The trader suggested that the retailers should be exempted from the rule. The government can allow them to take 500 and 1,000 rupee notes if the consumer is ready to fill up a KYC form, exactly the same procedure being followed in the banks.

The demand of the retailers appears valid one since although the government has fixed deadlines for people to exchange old notes, it cannot set any date for attaining normal liquidity in markets because of various constraints. Its ability to replenish banks with new currency notes and ease the withdrawal amounts would be crucial factors in stabilising the distribution markets.

Keeping this in mind, the traders are demanding that the finance minister remove all caps on amounts withdrawn from current and cash credit bank accounts to improve the delayed contract payments that may become a huge problem in days to come.

The first signs of a partial collapse in money economy were seen with associations of small and medium traders in India, giving a distress call to the union government to allow the retail traders to accept 500 and 1,000 notes. Citing that small businesses and retail traders had been badly affected by the Modi government’s decision to withdraw the top two currency denominations, it said that the disruption of money flow had affected supplies of essential commodities. That, in turn, had impacted distributors of fast-moving consumer goods and perishable commodities like vegetables and fruits.

The retailers who are placed at the bottom of the business chain have demanded that the authority be given to them to accept at least one higher denomination note from the consumer if the buyer is ready to provide his her KYC details. This exemption would improve cash flow in the markets and provide immediate relief to a large section of traders.

The market in Itwari, Sitabuldi, Gandhibagh, Sadar, Mahal besides markets all over the city have been deserted ever since the demonetisation decision was announced which has had a direct bearing on the lives of farmers and daily wage labourers.

When a Nagpur Today team visited the commercial markets in the city, the traders complained that the consumer footfall in the markets was very less in comparison to normal days. Traders, particularly the retailers had slack business activities. Salesmen at the retail counters were seen sitting idle. Rural retailers from talukas and other mofusil areas who generally visit the nearby district markets for procurement of goods had to remain at their respective places for want of sufficient funds of acceptable denomination.

Grocery market hit
Demonitisation has greatly affected capital liquidity in the market. The retailers are experiencing the full impact of the decision. Consumers are certainly not visiting markets because of very limited quantity of small denomination currency. The retailers are still waiting for the situation to return to normalcy.

Effect on vegetable market
Agricultural produce market committees and mandis across the city had very less transactions as farmers who had brought their produce for sale in the market had to face a nightmare when they could not get money against his saleable produce.

The market in Itwari, Sitabuldi, Gandhibagh, Sadar, Mahal besides markets all over the city have been deserted ever since the demonetisation decision was announced which has had a direct bearing on the lives of farmers and daily wage labourers.