ALSO READCash crunch after demonetisation ties jute industry in knots Demonetisation aimed to curb black economy, reduce cash transactions, Centre to SC Ind vs Zim T20: Focus was on implementing plans, not result, says Mandeep Singh No let up in cash rush on day 9 of demonetisation Nation bids adieu to Kupwara braveheart Mandeep Singh
Punjab's two main industrial sectors - hosiery and bicycles - have registered a drop of almost 50 percent in production due to demonetisation, industry representatives said.
The cash crunch has forced migrant labourers to leave for their native places, they added.
Manufacturers believe the state's industrial growth will be hit in the coming months.
"Bicycle production in a majority of factories here has plunged by almost 50 percent, as retailers and dealers are reporting a sharp decline in the sale of bicycles. Customers have almost stopped buying bicycles due to the cash crunch," said Ludhiana-based H.
S Pahwa, the owner of Nova Cycle Industries.
"The common man is now more worried about saving cash to meet their daily needs rather than spending on cycles or other non-essential items, which has hit our industry hard," added Pahwa.
The convener of the bicycle parts panel of the Engineering Export Promotion Council, Satish Dhanda, predicted 20-25 percent fall in overall production of bicycles across the country.
"Dealers and shopkeepers are cancelling their orders as sales have been hit by demonetisation," said Avatar Singh Bhogal, a bicycle maker.
Industry representatives said the problem is so acute that they do not have sufficient money even to pay wages to their workers because of restrictions on the withdrawal of cash.
"Workers who are not getting their wages are going back to their homes in Bihar and Uttar Pradesh, as majority of the factories do not have work. Some manufacturers have even reduced the workforce because of lesser number of orders in their hands," Avter Singh Bhogal.
Prime Minister Modi in a televised address on November 8 to the nation declared a ban on the use of Rs. 500 and Rs. 1,000 currency notes as legal tender as part of his government's crackdown on black money.
As per a survey conducted by LocalCircles, the decision of the Centre to cancel the legal tender notes of Rs. 500 and Rs. 1000 has taken its toll on 90 percent of traders.
Approximately 16 percent traders across the country are experiencing a sales decline in the range of 60-90 percent, which includes jewelers, furniture, sanitary-ware and traders dealing in other discretionary items, the survey said.
Approximately 28 percent traders are experiencing declines of 30-60 percent and those in this category include traders of automobile, computers, mobile phones, garments, etc.
According to the poll, approximately 46 percent traders are experiencing sales declines in the range of 0-30 percent and these include general stores, prepaid recharge and those trading many other essential use items.
In the survey conducted, around 8000 citizens were requested to visit their local market, speak to traders and small retailers and only then respond to the survey question.
According to the poll, 46 percent traders are experiencing sales declines in the range of 0-30 percent and these include general stores, prepaid recharge and those trading many other essential use items.
Per feedback from citizens, traders and small retailers are struggling for two primary reasons which are cash crunch and removal of black money from the system. Once the cash becomes available in the system most believe that 60-70 percent of the lost consumer demand and lost sales will come back.
However the remaining 30-40 percent consumer demand which were the purchases from black money is permanently lost.
Hence, their sales and earnings will now be lower in the short as well as medium term.
In a related survey conducted by LocalCircles on consumer spending, approximately 20 percent consumers plan to spend less in the coming weeks due to uncertainty post demonetisation. Another 30 percent consumers say they see themselves spending less in the coming weeks due to the limited availability of cash. 47 percent consumers said they plan to spend the same as pre demonetisation.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)