TRADE ACROSS COUNTRY HIT BADLY DUE TO DEMONETISATION
ENCOURAGEMENT TO DIGITAL PAYMENT WILL EASE THE SITUATION
As a consequence of demonatisation of high value currency by the Government, the commercial markets over the Country wore a gloomy and deserted look .Since past four days since demonatisation, consumer footfall in the markets is very less in comparison to normal days. Not only the retail activities but even the wholesale trade is affected severely because of very low volume of transportation of goods. Meanwhile, the Confederation of All India Traders (CAIT) has urged Union Finance Minister Mr. Arun Jaitley for remedial measures to intensify adoption of electronic payments beside ensuring smooth flow of currency both at the hands of traders and consumers. The CAIT has suggested that like special camps being organised for filing of IT returns, it will be appropriate if similar special camps may be organised in the markets with help of local Trade Associations for disbursement of currency. It further urged that Retailers who have direct connect with the Consumers may also be authorised to accept high value denomination currency from the consumer subject to necessary identification documents which in turn may be submitted to Banks by the Retailers for replacement of currency. Such a step will bring normalcy in the markets & will also off load the Banks from enormous pressure.
Post demonatisation, the trade in the markets across the Country has reduced to 25% in comparison to normal days. It is estimated that Indian retail trade is of about 42 lakh crores of rupees annually resulting to approximately Rs. 14 thousand crore per day out of which about 40% trade is conducted through Business to Business (B2B) whereas rest of the 60% trade is conducted through Business to Consumer (B2C) activities. The 60% of the total retail trade is conducted in urban areas whereas rest of 40% is conducted in rural areas. Rural retailers from Taluka and other Moffusil areas who generally visit nearby District markets for procurement of goods had to remain at their respective places for want of sufficient funds of acceptable denomination. APMC and Mandis across the Country had a very less business as farmers who had brought their produce for sale in the market have to face a nightmare when he could not get money against his saleable produce due to non availability of smaller denomination of notes. The logistic sector came to standstill as the truck drivers had only high denomination notes which caused blocks in smooth movement of transportation.
Demonetization has prompted the usage of digital mode of payments in the Country as people having debit/credit cards and different mobile applications of Banks, Financial Institutions and Technology providers, have started their optimum use during last three days in making payments for their day to day expenses. Many people who were earlier not using digital payments have also downloaded various applications on their mobiles to make payments.
To encourage widespread usage of digital payments,the CAIT has suggested the Finance Minister that transaction cost being charged by the Banks on usage of debit and credit cards is major deterrent in use of card payments and as such it is suggested that such transaction cost may be subsidized by the Government and the Banks may be advised not to charge any transaction cost. On the other hand, as per guidelines of the Ministry of Finance released on 29th Feburary, 2016, incentives may be announced for every usage of card payments. Like special camps being organised for filing of IT returns, it will be appropriate if similar special camps may be organised in the markets with help of local Trade Associations for disbursement of currency.
It has further suggested that KYC norms for Micro merchants whose per month card volumes are below Rs.50,000 and are having Financial relationships (CASA Accounts with PSUs/Cooperative Banks/Grameen Banks), limited KYC such as last 2 months account statement with existing bank v/s the full KYC documentation may be waived. It also urged that the Government should consider a waiver/reduction in import duties for Point of Sale Terminals. There should also be a drive to ‘Make in India’ for POS and other mobile based payment acceptance technologies. In this regard it will also help to scale up significantly the broadband connectivity in small towns and rural areas to facilitate digital transactions. Better utilisation of existing payment infrastructure and acceptance network and a level playing field for free market and competition is the need of the hour for all stakeholders to come together and participate in this digital drive. The National Payment Council of India (NPCI) should be made an independent regulator and a separate body for Rupay may be constituted for its greater penetration among the people.
