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Demonetisation affects farm supplies and enterprises dealing in cash
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Thursday, 01 December, 2016, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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Demonetisation has impacted the supplies from farms, but conflicting reports suggest a drift in the gravity of the problem from region to region. This has also impacted small and medium enterprises which largely deal in cash. Some of them also shut down due to the cash crunch.
Sources in the Agricultural Produce Market Committee (APMC), Azadpur,Delhi, said that the arrivals of fruits and vegetables reduced by almost half, since the farmers and traders who used to conduct business in cash were not able to forge any agreement on how they should deal with the situation.
Some farmers and traders decided to conduct business on credit. “The arrival is low and the demand has dipped as there is less cash to do the business,” said a senior office functionary at APMC, Azadpur (Asia’s largest wholesale mandi).
However, the situation in Ahmedabad, where the annual turnover of the APMC is approximately Rs 3,000 crore, is different. Jigneshbhai Patel, director at the APMC, said the situation has normalised now.
“The initial days were difficult as there was less cash available. But now, the situation has normalised, as the cash inflow has become better and traders also included different ways like electronic transfer of funds to do business. This has also resulted in cheaper fruits and vegetables,” he told.
Meanwhile, the food processing sector, which largely comprises small and medium enterprises, is facing the heat. According to industry sources, the enterprises that largely deal in cash for their operations, are facing a lot of trouble meeting their expenditure, and there are reports of temporarily shutting of their businesses.
“Most people do business in old style with cash mostly. Now they have to shift to the digital mode of business. We hope with the demonetisation move, the industry would consider doing business digitally and electronically to avoid any such phase in the future,” said an industry representative, on condition of anonymity.
He added that besides supplies, labour issues like wages impacted the operations.“Many workers in these small enterprises are daily-wage workers who were paidin cash. But due to less cash or no cash in hand, the enterprises were unable to work due to the uncertainty about the time taken in normalising the situation,” he stated, adding that it would take some time to assess the complete picture of the impact on this industry.
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