No trade is secure under demonetisation. Not only has the lustre of gold vanished from the market, but the lack of sufficient cash in the market has slowed down the trade of essential items like pulses, vegetables, grains and dry fruits. The cascading impact of note ban has rendered the most promising job markets in the city barren, forcing migrant workers to go back to rural areas. A look at various sectors reveals the sordid state of affairs as to how confiscatory demonetisation resulted in tumbling of the Delhi markets.
Though the region has been witnessing deception in almost all the sectors, the bullion industry seems to have been particularly hard hit. The industry, since government’s demonetisation move, has not only been facing cash crunch but also a fear of raids by the Income Tax Department.
Even three weeks after the announcement, a majority of the gold and jewellery establishments remained closed in and around the national Capital. There were reports that the Income Tax Department conducted series of raids on jewellery shops located in Karol Bagh, Dariba Kalan and other parts of Delhi during the first week of currency ban resulting in the shutting down of several shops.
With the consistent shutting down of the gold and jewellery establishments, traders have claimed huge losses to their businesses. “In view of the ongoing marriage and festival season, we had invested a huge amount in gold purchases but the tragedy is this, that we can not get the invested money back as the government has almost banned currency transactions.
We have been forced to make payments against out investments but we can not force our clients/customers to purchase the stocked materials. Owing to this, we are in loss. We can not open our shops, deal with customers as per the earlier existing norms. Our businesses have gone down by 60 per cent these days which cannot be recovered easily,” said a bullion trader from Dariba Kalan area, Asia’s noted bullion market.
Following the government’s decision to demonetise Rs 1,000 and Rs 500 notes with effect from midnight, the real estate market, especially the unorganised builders and secondary (resale) property market have been also negatively impacted. According to real estate developers and consultants, flushing out of high denomination notes from the economy has witnessed an immediate impact on property prices in Delhi, Noida, Gurgaon, Ghaziabad and other NCR parts.
The property rates have dipped and there is a little possibility of these rates being corrected soon and coming back to realistic levels. The real estate firms and the developers are bracing themselves for the next couple of months which are going to be critical for the property business. As of now the property rates across the districts have remained certain but are likely to be revised soon.
Buyers largely use black money by paying in cash to avoid property transaction taxes or stamp duty.
“The lower liquidity has hampered the construction progress as the buyers of under-construction properties have been facing difficulties in paying the advances and part payments leading to the lower collection by builders which may lead to the cut in prices or the builders might introduce new attractive schemes to the buyers to boost up the sale. The impact is more on the small or marginal developers,” said Rakesh Kumar, a real estate consultant.
The food market especially dry fruit, grocery and vegetable remained volatile. The crisis has not only tumbled the market but has also led to a rise in the prices of essential household commodities like dry fruits, flour, oil, pulses and dozens of other essential commodities. The market analysts suspect that the situation will get further aggravated in the coming days as no concrete step is being taken to handle the situation.
“The sudden announcement for scrapping higher denomination notes left no options for any section living in the country. The market players, involved in trade and business of various food items, are hit hard as both demand and supply have gone down drastically.
On one side, the suppliers forced us to make payment for stock supplied earlier while the purchases made by the consumers got drastically reduced, resulting in huge monetary losses,” said Pradeep Gupta, a trader from Khari Baoli, Asia’s largest dry fruit market.
Cash-strapped customers cum retailers visiting various mandis are also having a tough time as they have been struggling hard to make their ends meet. A majority of them have been demanding goods in lesser quantity resulting in lesser market transactions.
A few have even made purchases on credit from the wholesalers. Similarly, a majority of the households have been buying food items on credit from retailers. “Since we have been facing a cash crunch, we visit the mandi occasionally. The demand for lesser quantities of perishables is resulting in trade slowdown,” said Hari Raut, a vegetable seller from Adarsh Nagar area near Azadpur mandi.
Despite hundreds of scheduled weddings over the coming weeks, the markets wear a deserted look. Marriages may be made in heaven, but for couples tying the knot soon, demonetisation has struck them at a wrong time. From shagun to the marriage shopping, households with marriages are in a panic mode. “We did not realise the importance of 100 Rs notes. Now we were desperately looking to change Rs 500 for smaller currency notes. We couldn’t find much. It’s been a nightmare for us,” said the father of a bride-to be.
With demonetisation leading to acute shortage of cash, the big fat Indian wedding season has turned into a nightmare for both traders and families. “Should I first pay the tentwallah or the jeweller? I go through dilemmas like this everyday. Thanks to the government’s decision to ban Rs 500 and 1000 notes, I don’t have enough cash to pay people. Tomorrow, some other person will be knocking my door for payment. The excitement is out of the door, the wedding festivity has turned into a nightmare,” said a concerned family member.
Business activity in the bustling markets of Old Delhi and other parts has slowed down and while malls and big showrooms are said to have picked up business after the initial slump, small and medium level traders in local markets are still facing 50-90 per cent dip in their business. The reason being this that these traders have not yet adopted the modern practice of transaction, the online payment facilities. Most of these traders in Chandni Chowk and surrounding markets do not have online payment facility, which drives customers away, said a garment trader.
Prime Minister Narendra Modi’s decision to scrap the Rs 500 and Rs 1,000 notes has brought Gaffar Market to a cringing halt. Gaffar Market is one of Delhi’s largest grey market dealing in electronics items. India is worth more than Rs 55,000 crore in terms of counterfeit goods. Electronics contributes to over 18 per cent- an estimated Rs 10,000 crore- in this.
A very next day after the Central Government issued an order to stop exchanging of high-value banned old currency notes of Rs 500 and Rs 1,000 with the new one, confusions prevailed among people in several parts of the national Capital. Some labourers seen standing outside banks to exchange old notes were asked by the bank officials, to deposit them in their accounts as the practice of exchanging the defunct currency had been stopped. Many daily wagers were also seen standing outside Punjab National Bank Branch at Azadpur, totally oblivious of the fact that that counter to exchange old demonetised notes had been closed. They were then directed to deposit the amount in their accounts.
Restaurant and dhaba owners have come to the rescue of cash-strapped outstation students in the North Delhi by providing them succour on credit post demonetisation. The move has proved to be a blessing in disguise for students coming from various parts of the country for appearing in various competitive examinations as they can’t afford to stand in long queues before banks and ATMs to get cash.
Dhaba owners in Nehru Vihar and Mukherjee Nagar areas in the Capital have started to feed students on credit by taking photocopies of their Aadhaar Cards or other identity proofs. Students can now buy medicines and books on credit or pay via digital means.
Also, residents’ welfare associations (RWAs) have come out in support of these students. There is a notice on the main gate of Central Park in Nehru Vihar asking students to share their problems with the members of the RWAs. The majority of the students stay in rented accommodations and in one-room flats at Mukherjee Nagar, Vijay Nagar, Camp, Maurice Nagar, Indira Vihar, Outram Lane and Hakikat Nagar areas. Many of them had no cash for food, rent or other educational expenses.