Demonetization: Mumbai traders say drop in sales temporary, benefits might be permanent
Despite witnessing a drop in business since demonetization, traders from the city are hopeful of a silver lining in the near future.
Almost three weeks into the demonetization of Rs 500 and Rs 1000 notes, businesses across the spectrum have reported drop in sales, with some claiming a drop of over 50 percent.
The decline in sales can be attributed to the severe cash-crunch in the market post demonetization, as a majority of the general population was left with redundant currency and had to wait hours before they could withdraw or exchange limited amounts from the banks and ATMs.
As a result, people restricted their spending to ‘crucial’ expenses for the first few days and businesses saw a drastic change in sales.
“Not only the businesses in the financial capital Mumbai and neighbouring Navi Mumbai and Thane, there is steep drop of 50 per cent in all businesses of fruits, vegetable, food grains, dry fruits due the cash flow crisis,” Sanjay Pansare, a fruit trader and former director of Navi Mumbai APMC, told news agency PTI.
“Vegetables are perishing. We are unable to pay cash to truckers who normally charge up to Rs 1 lakh for transporting apples from Kashmir to Mumbai and they are not accepting cheque. Earlier, we would get 325 trucks of fruits everyday which has reduced to 175 trucks per day,” he added.
According to Ramesh Savkar, a vegetable trader at APMC, the decision has impacted the purchasing power of people, but only in the short run.
“It’s not like people have stopped eating fruits and vegetables. They have simply stopped stocking them, because of which local vendors have reduced purchasing in bulk. Once people are able to withdraw adequate amounts from their accounts and ATMs, things should get back to normal. This pain is temporary, but the benefits might be permanent.”
Meanwhile local vendors, despite the drop in business, are still supportive of the government’s decision to curb black money.
Mohammad Bollar, who runs a small shop of leather products in Fort of South Mumbai, told PTI, “No matter our daily business has shrunk up to 25 percent, the most important thing is this will subsequently clean the market and in coming days, customers would have market of fair pricing.”
For some, things have already started getting back on track.
“In the first week, our sales dropped by 40 percent. The situation remained the same in the second week. But in the last week, our business has started picking up again. We expect things to return to normalcy in the next 2-3 weeks,” said Sumit Rajan, a medical shop owner in Bandra.
According to Federation of Associations of Maharashtra (FAM), a Mumbai-based organization representing over 750 small-scale and trade and service providers associations, the situation will be tense for the next one or two more months. However, the entire economy will benefit going forward.
FAM president Vinesh Mehta said, “This pragmatic step is creating a sense of panic among the public, that is why every transaction and business has gone down 20 percent or more. But it is more important that when this phase gets over, entire country would reap the benefit out of it.”
Incidentally, not everyone has witnessed a drop in business. There are a handful few who have actually done more business post demonetization by making the most of the situation.
Madan Singh, a tea vendor from Andheri, is one such vendor who claims to have done more business since November 8.
“My son helped me set up a Paytm account, which I now use to accept payments. Since most of my customers are working individuals, they already use the service. It has now become very easy for them to pay me every alternate day or settle accounts by the end of the week. Just by giving the option to pay via mobile, I have attracted more customers.” Madan said.
“Till now, people avoided paying tax because they thought it would be pocketed by corrupt politicians. If we make our economy less cash dependant, everyone will be held accountable. This will go a long way in the nation’s development,” he added.