Demonetization has hit 69% of businesses in Mumbai, Pune and nearby areas, a survey conducted by the State Bank of India (SBI) stated. The SBI Research report stated that overall the flump in business is below 50 per cent for the majority of the businesses that were affected. Construction sector and the informal road-side vendors were most hit with 55% and 71% respondents stating that the business got fell by more than 50%.
The report further stated that varied responses had been received from textile/ readymade garments sector and FMCG sector. Shopkeepers dealing with retail segment of the textile sector had been more impacted as compared to those in the wholesale segment. Moreover, the wedding season had been disappointing with sales slumping significantly as compared to last year. The gems and jewelry sector had also been impacted with declining sales. Meanwhile, SBI share price opened at Rs 249.64 from a previous closing of Rs 248.30 on the NSE today. The stock was trading 2 points higher at 10:10 am.
Positive Impact of Demonetisation (A blessing in disguise):
According to the SBI survey and report, the positive thing was that prevalence of digital modes of payments in chemist shops and automobile stores had possibly resulted in only a marginal impact on their sales. Around 41% sellers already had PoS machines available even before demonetisation but their usage had seen an increase only post demonetisation, the report said. In fact, 15% moved to electronic payments, viz m-wallets, PoS in the ensuing weeks. This meant that Rs 25,000 cr of cash based transactions had moved to digital in the last two months.
All in all, this was a good beginning, the report said. There was still some resistance about moving towards cashless payment systems but majority were contemplating of shifting soon.
The SBI research report further stated that merchants were now quite enthusiastic to adopt the digital channels although they were facing certain challenges in the form of non or less availability of PoS terminals and lack of training and knowledge. The government should build incentives for banks investing in creation of card acceptance infrastructure by deploying PoS terminals or creating acceptance points, SBI said.
The State Bank of India (SBI) finally suggested the government to very quickly take on board novel merchants, particularly small and marginal traders, grocery shops, and others on digital platform by a more targeted approach. This could be incentivized and the same could be met by support funds from the government.