Millennium Post

‘Remonetising `500 notes must be Govt’s top priority’

Calling for ‘re-monetisation’ of Rs 500 notes to be given top priority by the government, CII President Naushad Forbes on Wednesday said this is only way to tide over the demonetisation-related problems.

“I think the only way is through the rapid effective remonetising. Rs 2,000 notes are good in terms of value, but at the end of the day, it is difficult for someone to spend Rs 2000 note,” Forbes told reporters here.

Forbes, who is also Co-Chairman of Forbes Marshall, was in the city to attend the inaugural session of the National Quality Summit 2016 organised by the industry body Confederation of Indian Industry (CII).

“As 500 rupee note series come into circulation, I think the pain will start to lessen” he said.

“We need to support all efforts of the government in making that happen as much as possible,” he added.

At the same time, there should be more and more usage of new technologies to help those who do not even have bank accounts or Aadhar cards, Forbes said.

Forbes said he has less sympathy for the real estate sector, but much more for consumer goods companies who have registered a huge drop in sales.

“Frankly for the real estate sector, I have less sympathy, but have much more sympathy for all consumer goods companies because they have registered huge drop in sales.”

Forbes said things however are recovering from what it was in first three days of the announcement.

“Some companies in first three days, registered 90 per cent drop in sales and as of today it is a 50 per cent drop.So things are recovering, but 50 per cent is still a big number,” he said.

He also said it is the right and essential move to wipe out black money.

In the long run, demonetisation is entirely correct and the CII has supported the government’s move, but in the short run, there is a lot of pain for consumers, Forbes said.

“In the long run it is entirely correct and the CII has supported government’s move. In the short run, consumers will face a lot of pain which we see in the (bank) lines around the country and the difficulty that the people are having,” he said. Forbes said, personally for him, the demonetisation move is an inconvenience, but not a problem in itself.

“For me it is an inconvenience, but inconvenience is not a problem. For people who depend on cash for their living, it is much more serious and we need to see how to address their problems on ground and day-to-day basis,” he said.

Facing a cash crunch in the wake of demonetisation, handicraft exporters have urged the government to increase immediately the cash withdrawal limit to Rs 5 lakh from the existing Rs 50,000 per week.

“Situation is not good. Workers are not coming for work.It will severely impact our production and export orders. We have requested the government to immediately take remedial measures,” Export Promotion Council for Handicrafts (EPCH) Vice Chairman Rajesh Jain said.

He said the cash withdrawal limit should be increased to Rs 5 lakh per week depending upon the scale and size of the business organisation.

The handicraft industry is an important employment generating sector and it provides livelihood to about 70 lakh persons across the country.

“Handicrafts are predominantly produced at the village and cottage level and mostly by artisans, craftspersons, especially women folk and weaker sections of the society. They take cash and we are not able to pay them,” he added.

Citing example of exporters dealing in wood, Jain said wooden logs are required every day and at present they are being auctioned at mandi on cash basis.

“They should accept credit/debit cards for payments.Portable ATMs can also be used to ease the cash withdrawal problem,” he added.

To help small traders meet their business requirements, the government had last week increased the cash withdrawal limit to Rs 50,000 per week.

“Considering the cash availability, for the business entity having current account for past three months, the limit has been increased to Rs 50,000 per week to pay wages and meet sundry expenses,” Economic Affairs Secretary Shaktikanta Das had said.

The government on November 8 announced the demonetisation of Rs 1,000/500 notes to flush out black money. 

The sudden move led to people thronging banks and ATMs to deposit and exchange old notes, leading to chaos and serpentine queues at branches and impacting business operations across the country.

In October, handicraft exports grew by 3.45 per cent to USD 149.5 million. 
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