Skepticism Gaining Currency with Demonetisation Pangs

Thiruvananthapuram: As the initial euphoria over the boldness of demonetisation gradually gives way to cynicism about its success and frustration over its impact on day-to-day life, a section of business leaders gets down to analyse it

“One of the motivations for this action was to weed out corruption — to expose undeclared ‘black’ money. But I am not sure if the government has achieved this objective. It was also an enforced digital disruption to give a major push to shift from physical to digital money, but in reality, this will happen at a slow pace. While I do not intend to speak against demonetisation, this has led the country to an unfortunate crisis. It is poor and inconsistent policy executed even poorly. Though many of us did not experience the real pinch, it was the poor who bore the brunt of suffering.”

Thomas John Muthoot, Chairman & MD, Muthoot Pappachan Group

“Demonetisation is a very significant step taken by Prime Minister Narendra Modi to curb the spread of black money and corruption in the country. The step has assisted the nation to move towards cashless payments in the form of online, card and mobile transactions, which would, in turn, have a positive impact on the Indian economy. Being in the financial services industry, we did face a bit of a slowdown during the initial days of demonetisation, but the situation is better now as cash circulation has improved. Our operations in the GCC have had limited impact since the majority of our remittance transactions pertains to bank credit. Our organisation is very actively involved in the digitisation of remittance process and we aim to move about 40 per cent of our transactions from the GCC on to the digital platform by 2020.”

Adeeb Ahamed, CEO, LuLu Exchange; MD, Twenty14 Holdings and Director, Tablez Food Company

“The Central Government’s intention was good but it could have been implemented in a better way. The severe shortage of currency has affected the public. Moreover, sudden changes in guidelines for deposits and withdrawals have created confusion and panic among the citizens. As a result, people are reluctant to spend even though they have cash. And, this has affected the retail sector also. Having said that, I feel it is the duty of all citizens to accept the Government’s decision and make it a success so as to wipe out black money, counterfeit currency and corruption. For this, the mindset of the public should change. Politicians must stop fishing in troubled waters and using the crisis for their selfish motives.”

Deepak L aswani, Chairman, Aswani Lachmandas Group

“Demonetisation has totally derailed tourism industry. It appears that the Centre had not even thought about tourism sector while planning the decision. Otherwise, they would have given special consideration to foreigners to exchange their currencies. On an average, a foreigner who stays two or three days in Kerala would spend at least $500 besides hotel expenses. There will be a huge dip in foreign exchange earnings at the State exchequer due to severe cash crunch. Foreign tourists are advising their fellow countrymen not to travel to India which, in turn, is getting reflected in the significant drop in fresh bookings. The flow of domestic tourists has also come down. Social gathering, dining and partying have reduced in the last two months. People may have money but they are holding the currency because of uncertainty. It will take at least six months for the sector to recover from this meltdown.”

Sajan Varghese, MD, Saj Hotels & Resorts

“Even though Microfinance and NBFCs have experienced difficulties in mobilising weekly/monthly collections, we hope it will not affect in the long term as cash flows of the borrower segment is mostly in smaller denominations. But the payment delays have disrupted the collection cycle and put the disbursals under pressure. From a strategic point of view, this is an extension of the financial inclusion agenda of the Central Government. The quantum of digital transactions across categories have increased by 400- 1000 per cent since November 8. So, I believe that in the long term it will cleanse the sector and breathe in a new lease of life.”

Paul Thomas, Chairman, ESAF Group