What are the sectors which are affected due to demonitizatiin?
Answers
These 4 sectors are the worst hit post demonetisation
Minister Narendra Modi’s surprise demonetisation decision last November removed almost 86 per cent of the currency in circulation then
New Delhi: Certainly, every policy has a stated goal as well as secondary consequences, some of which are unintended. Prime Minister Narendra Modi’s surprise demonetisation decision last November removed almost 86 per cent of the currency in circulation then, creating a severe shortage of cash in a cash-driven economy.
Economists say the move hurt consumer spending, which powers more than half of the $2.2 trillion economy.
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Gross domestic product grew 5.7 per cent in April-June, its slowest pace since the January-March quarter 2014.
The downturn in India's growth is very worrying and is the price the country had to pay for the 2016 demonetisation, according to Kaushik Basu, a former vice-president and chief economist of the World Bank.
Read: One year of demonetisation: Five positive impacts on economy
The Modi government has approved highway projects worth Rs 7 lakh crore, including the ambitious Bharatmala programme, over the next five years. The mega highway projects is likely to contribute 2-3 per cent to the country's economic growth.
Through the development of highways and roads, the government plans to bolster economic activity and generate at least 14.2 crore man-days across the country by 2022.
Here’s a look at the impact across businesses, nearly a year into the note ban.
1.) Real estate
Reports say demonetisation has brought down the registrations of properties by up to 30 per cent in the national capital region. It was reported that the registrations of plots, shops and flats have gone down to 25 per cent in Gurugram.
Developers and consultants say that home sales have slowed down significantly as consumers defer home purchases.
Read: Demonetisation, GST may impact wedding season business by 10-15%: Assocham
There is one school of thought that views that the push to road infrastructure would have a ripple effect on construction and job creation.
The Union Cabinet has approved a $32.43 billion plan to recapitalise its state banks over the next two years, in a bid by Modi to tackle a major drag on the economy that has frustrated his attempts to boost growth.
2.) Consumer durables
Analysts say the market for consumer durables almost still operates 80 per cent on cash, thereby affecting volumes. Makers of durable goods launched new schemes to tempt consumers to go cashless.
Some of them also extended discount offers and promotions such as waiver of processing fees.
Read: One year of demonetisation: Online transactions on the rise, but cash is still king
3.) Manufacturing
Almost a month after the demonetisation, manufacturing growth decelerated sharply in November as cash crisis slowed down the domestic consumption. The Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) -a gauge of manufacturing performance- fell to 52.3, down from a 22-month high of 54.4 in October.
Read: BJP to mark November 08, 2017 as 'anti-black money day': Arun Jaitley
However, Indian manufacturing activity expanded for a second consecutive month in September 2017 although firms struggled to sustain demand, with the price of goods barely increasing.
Experts say the collapse of the manufacturing and construction sector are serious signs of a crisis in the economy since both of these account for a large majority of non-farm jobs in the economy.
4.) Slump hits SMEs
Small and medium enterprises (SMEs) witnessed slowdown post demonetisation, resulting in fall in production, wages and employment, according to a study by the India Development Foundation.
The slowdown had triggered gloomy forecasts as businesses struggled to come to terms with the after-effects of the demonetisation.
All strong medicines have some side effects. And so is demonetisation. It is more about forcing a change in business, politics and even personal habits, than merely wiping out black money and fake currency accrued over the years.
