10 big gainers of the demonetisation drive

Use your old notes to buy medicines, jewellery or iPhones, or simply donate them to the temple

Don't want to miss the best from Business Standard?

The Narendra Modi government has pulled off one of the most significant and bold reform measures in recent times. While it aims to counter the black money menace, the move has had negative repercussions too.

The government's move to scrap 500- and 1,000-rupee notes from circulation has spelt disaster for rural women, grocers, farmers, small traders, and several others. On the other hand, it has resulted in a windfall gain for some sectors as well, such as new economy instruments such as e-wallets, which have been among the largest beneficiaries of the note ban drive.

Since November 8, people have been exploring ways and means on 'how to convert black money into white' and this has come as a boon to some sectors.

Business Standard has compiled as few sectors that have gained massively, courtesy demonetisation:

1. Medicine

Indians are exchanging old notes for medicines that will last them a few months, as pharmacy chains have become one of the last few stations to accept the old 500- and 1,000-rupee notes as legal tender. Pharmacies have witnessed spike in sales of chronic medicines. According to a report in The Times of India, chronic therapy, which includes anti-diabetic, cardiovascular and blood pressure drugs, has shown a significant increase in sales in November, as compared to October.  Overall chronic therapy may gain 10-15% additional sales in November,” market research firm AIOCD-AWACS said. The trend shows that since November 1, the sales of drugs in this therapy grew from Rs 14.1crore to Rs 16.8 crore.

2. iPhones

Apple sales shot up in November after customers rushed to buy iPhones with banned higher currency notes. According to reports, iPhone sales soared in India in the three days immediately following demonetisation, as stores booked sales with back-dated receipts. Significantly, iPhone 7 and iPhone 7 plus, are among the most expensive phones in the market, costing between Rs 60,000 and Rs 92,000.

As per trade estimates, over 100,000 iPhones were sold in these three days, which is around three-fourth of the handset’s average monthly sales. 

3. Temples

Demonetisation has made temples a lot wealthier. Over the past three weeks, there has been a surge in hundi deposits and donations, most of which have been in the banned 500- and 1,000-rupee notes.

The Finance Ministry has said cash deposited by temples from the hundis will not come under the tax scanner. "For temples, there is an exemption that if the money is from the donation boxes, we will not ask questions," said Revenue Secretary Hasmukh Adhia.

At the Lord Ayyappa temple, Kerala, officials said hundi collections and money earned through sale of temple offerings were up by Rs 2 crore in a week's time as compared to the same period the previous year. Similarly, authorities at the ancient Dasanjaneya Swamy Temple at Machavaram claimed that they had never seen so much money, as the temple receives donations somewhere between Rs 1.5 lakh to Rs 3 lakh from its devotees in a month.

4. Jewellery

Early on, gold prices spiked because many black money hoarders rushed to jewellery shops as soon as demonetisation move was launched. They bought gold late into the night. In most cases, jewellers showed backdated transactions.

But after the excited panic buying on the night of November 8 sales dropped by as much as 70 per cent coupled by fears of surveillance by the income tax department.

5. Fishermen in Maharashtra

While most farmers are struggling to buy seeds and other farm supplies because of demonetisation, the fishermen community in Mumbai has benefited. According to a report in Hindustan Times, "Selling seafood during the demonetisation drive proved fruitful for the Koli community, as they amassed over Rs two crore within ten days."

The community started accepting old denominations as people looked to get rid of their high-valued notes.

6. Fintech start-ups

 Fintech start-ups are the biggest beneficiaries of the government’s demonetisation initiative. Paytm, for instance, has said that it has seen a 250 per cent spike in overall transactions, which includes a 400 per cent increase in offline payments. PayU India has registered an 80 per cent jump in transactions, while Bengaluru-based Ezetap, which makes its own point-pf-sale (PoS) devices, saw a 25 per cent spike in transactions. Freecharge claimed that the average wallet balance on its platform rose 12 times since the announcement.

7. e-Wallet firms gained traction too. E-wallet companies are seeing a sudden surge in customer base and transactions following the Centre’s demonetisation move, according to netCORE Solutions, whose clients include Citrus Pay and Ola Money. Companies in this space, such as Paytm, MobiKwik, PayU India and Freecharge saw a surge in e-wallet-based deals within few hours since the announcement. Moving with the current, Snapdeal and FreeCharge launched a “wallet on delivery” plan within 24 hours of demonetisation. Flipkart has increased point-of-sale (PoS) machines to cover more than 120 cities (3,000 pin codes) and has started wallet cashbacks. Amazon too launched offer to go cashless.

8. E-commerce: Flipkart, Amazon India and Snapdeal plan to increase discounts to drive sales. Over the weekend, Flipkart offered around 40-80 per cent discount on various items. Myntra offered discounts of up to 70 per cent. Amazon India handed out flat discounts of 40-70 per cent in its crucial fashion category.

9. Debit cards/Credit cards: Government has waived off service charge on cards, hence, people are using them more freely. Economic Affairs Secretary Shaktikanta Das said, "All public sector banks and some private sector ones have agreed to waive the transaction cost for all payments made through debit cards." This fees waiver has been activated till 31st December.

10. Salons and Spa: Branded salons such as Jawed Habib’s and Head Turners continue to accept the demonetised notes of Rs 500 and Rs 1,000. An Economic Times report said that in a bid to ensure demand for their premium services, some have even launched a special membership drive under which one can avail services worth up to Rs 50,000, with cash deposit of Rs 25,000.