MUMBAI: Prime Minister Narendra Modi’s decision to demonetise denominations above Rs 100 and circulate newly designed Rs. 500 and Rs 1000 sent tremors across the country on 8 November. By dawn the next day, news of how and to what extent, several industries would be affected by it, apart from the citizens, were circulating in the media.
The unprecedented step has hit the markets hard, to say the least, as Sensex and Nifty 50 dropped to the lowest since August 2015. As the stock market recovered, real estate, jewellery, and recreation and a section of F&B industry are being expected to feel the brunt the most.
“Cash transactions or black money deals have plagued the sector for a long time, sometimes even accounting for up to 50 per cent of transactions. This (demonetizing) move, combined with the Benami Property Act which became effective on 1 November, will help weed out corruption and black money to a large extent, from the sector. The organised segment of the market shouldn’t be majorly impacted since most homes are now bought by end-users who avail home loans. The unorganised segment which relies mostly on cash transactions, will be impacted significantly, however. While this will slow down the market in the short-term, it will make India’s real estate sector more transparent and organised in the long-term, which in turn, will attract more funds, both, domestically and internationally,” added housing.com CEO Jason Kothari on a more positive note.
E-commerce suffered as well, as the players were restricted from operating on Cash On Delivery.
Oxigen Services India DMD Sunil Kulkarni said, “In one of the impacts of the demonetization of Rs.500 and Rs.1,000 currency, many e-commerce companies have temporarily discontinued COD. However, the affected users have found an option in prepaid visa card. In the past couple of days, post-demonetization announcement, the load value on Oxigen Wallet prepaid visa cards increased four times. The daily average number of users have also increased by 167 per cent, which is clearly showing a trend that people are adopting new ways to make cashless transactions.”
An Oxigen wallet user can create make a prepaid visa card on the go using balance in wallet or by cash loading through its 200,000 retail touch points spread across India and pay for all online transactions thereby addressing a concern for COD transaction ban.
"Modi government continues to adopt innovative and feasible ways to eradicate the menace of black money and move India to 21st century nation. The demonetization is a bold step. Not only will this move bring transparency in the system but will also control the menace of counterfeit currency which has been swelling. After supporting the startups, giving impetus to the digital economy, this is another step for India to be at par with other great nations of the world,” added Droom and ShopClues founder Sandeep Aggarwal.
On the other hand, online and mobile money services have felt the biggest push, as admitted by PayTm in a statement earlier released to the media.
“As millions of consumers across India have taken to using their Paytm Wallets to transact offline, our biggest opportunity is to be available in every town and city in the country. We want to reach there faster, are looking to further strengthen our onboarding teams as we continue to build India’s biggest payments network.” said Paytm SVP Amit Sinha. The Paytm platform saw an overwhelming 435 per cent increase in overall traffic within hours of the Prime Minister’s demonetizing Rs 500s and Rs 1000.
Similarly Vodafone’s M Pesa division also welcomed this move. “We reiterate our commitment to actualize the government’s vision through Vodafone M-Pesa that leverages the reach of mobile technology to enable financial inclusion and offers the convenience of a digital wallet for easy transactions. The unique cash-out feature of Vodafone M-Pesa makes it the ideal digital wallet for masses, enabling users to digitise cash, remit it to family and friends, pay bills and/or withdraw it at their convenience from over 120,000 touch points across the country,” said Vodafone India M-Pesa business head Suresh Sethi.
Will this give a boost to digital marketing and encourage more marketers to spend on digital media?
“This is a wonderful move by the prime minister and is sure to take the digital economy to the stratosphere! Digital can give India a huge competitive advantage – this action will help shift masses to using digital. While the initial few days will be tough, in the long run it will be greatly beneficial to the economy,” iProspect CEO Vivek Bhargava.
“The bold move comes in as an effort to fight tax evasion, including allowing taxpayers this year to come clean about undeclared income, without facing full penalties. This initiative will lead to further assertive action towards fighting corruption and terrorism in the country. It aims at a long overdue newer, cleaner India,” seconded Mindshift Interactive CEO Zafar Rais.
While many have predicted that SMEs and startups will have a hard time during the initial days of transition due to cash crunch, several start-ups are willing to look beyond. "Bold & visionary move! While its implications will take time to materialise and will hopefully be all positive, the sheer courage and audacity of it is truly inspirational,” shared Revv CEO and co-founder Anupam Aggarwal.
Adding his perspective as an executive from the travel industry, FindMyStay co-founder Rohit Khetrapal added, "As the country has gone cashless for the next two days with the prime minister's announcement, it will shift the offline bookings in travel domain to online bookings but leisure travel will be slow over few days because of cash not available in the market that people need for food, transport etc. For example, Goa doesn't have Ola or Uber, and travelling is a challenge in a sense of cash. However, this is a revolutionary step to curb corruption.”
A section of the broadcast industry supporting the incumbent establishment policy expressed happiness. Essel Group chairman, and Rajya Sabha MP had tweeted: “This decision is truly path-breaking, probably one of the biggest economic reforms in Independent India. It will definitely curb the black money issue and reduce corruption drastically." ZEEL MD & CEO Punit Goenka stated: “The important decision is aimed towards the brighter future of our nation! There will be short-lived inconvenience, but for a better tomorrow." DishTV CMD Jawahar Goel said “We are in sync with the cause (demonetisation) which in the long term will impact the economy positively. We have introduced special benefits to our patrons which will provide them continuity in entertainment and convenience of transactions in the present scenario.”
While most industries as looking at the brighter side of the current situation, all isn't merry in Bollywood. With new releases coming this weekend, Bollywood and other film industries in the country are also expected to feel the impact, especially the small budget releases. The All-India-Release of Hindi Feature Film “30 Minutes” was scheduled this Friday, 11 November. But now, fearing an empty house, the makers have decided to postpone it to 9 December, 2016.
Producer-director Yesudas BC and executive producer Amarjit Singh Kohli, expressed their discontentment" “Since the sudden announcement of demonetization, a large number of requests from cine-goers have been constantly pouring in explaining that they (cine-goers) are having acute shortage of Rs 100 & low denomination notes owing to the closure of banks on 9 November 2016 and the subsequent restriction on the maximum amount of withdrawal of money from banks and ATMs.”
On the flip side, Cinépolis India India Strategic Initiatives director Devang Sampat pointed out, “The ongoing demonetization is restricted to currency notes in circulation; the online booking will be a feasible option. We want to provide convenience to our customers. Booking tickets online will prove to be a win-win for our patrons; they can book tickets with convenience.”
