Commerce and Industry Minister Nirmala Sitharaman has called a meeting of export promotion councils and other sector representatives tomorrow to discuss the impact of demonetisation. “All the issues pertaining to exports and impact of demonetisation are likely to be discussed,” an official said.
The government on November 8 announced demonetisation of Rs 500 and Rs 1,000 notes from mid-night and replace them with new Rs 500 and Rs 2,000 notes. The move created shortage of currency which led to hardship for people.
Expressing concerns on the development, Council of Leather Exports (CLE) Chairman Rafeeq Ahmed said the move to put limitations on cash withdrawal is impacting the working capital of exporters. “It is not practical and is impacting exporters as we have to pay cash for certain perks like overtime and extra incentives to labourers. Temporary workers too demand cash,” he said.
Sharing similar view, trade experts said that the move has implications on the supply side. “Demonetisation would impact exporters particularly small and medium units as most of them still deal in cash with regard to wages of labourers,” they added.
All the export promotion councils including sectors from pharmaceuticals and textiles will attend the meeting besides Federation of Indian Export Organisations (FIEO). After recording negative growth for about two-years, exports have started recording positive growth.
The outbound shipments continued to grow for the second month in a row, expanding by 9.59 per cent to USD 23.51 billion in October on healthy growth in shipments of jewellery and engineering products. India’s exports are expected to reach USD 280 billion by the end of this fiscal as against USD 261.13 billion in 2015-16.
India’s economic growth is expected to fall by up to 1 percentage points over the next 12 months in the wake of demonetisation, while longer-term gains will depend on follow-up reforms, says an HSBC report. According to the global financial services major, in the short run, India’s drive to withdraw and replace high- denomination currency notes will bring ‘some benefits, some losses’.