Demonetisation hit sectors that need special attention in Budget '17

Real Estates

Demonetisation brought down the registrations of properties by upto 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.

Delhi government's revenue data revealed a total of 7,028 properties were registered in the city in October but the number was 4,417 in November.

Budget Expectations: Assocham has suggested the Centre to impress upon states to "drastically" lower stamp duty on residential and commercial property deals to dissuade people from undervaluing purchases.

Auto Sales

After a gap of 44-months total automotive sales in the domestic market declined by over 5 per cent in November, the first drop of this calendar year. The auto sector had declined 7.75 per cent in March 2013 and saw a marginal drop of 0.78 per cent in December 2015.

However, these are wholesale numbers (captured from sales from companies to dealerships) and the situation at retail level is far worse. Those in the rural markets like Hero MotoCorp and Mahindra were hit more due to month-long cash crunch in rural areas of the country.

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.

"PMI data for November showed that the sudden withdrawal of high-value banknotes in India caused problems for manufacturers, as cash shortages hampered growth of new work, buying activity and production," said Pollyanna De Lima, Economist at IHS Markit and author of the report.

Leather Industry

Demonetisation has badly hit the trade in major clusters of leather and related products in India. "There has been a significant decline in the arrival of animal hide. While tanneries in Chennai have recorded more than 60 per cent fall in skin arrival, other major leather clusters - Agra, Kanpur and Kolkata have recorded over 75 per cent decline in this regard," a survey-cum-analysis on Impact of Demonetisation on leather industry by Assocham said.

"The leather industry is reeling under stress as butchers are not providing animal hide for (which) they are not being paid in cash, tanneries are not able to get the hide transported as they are unable to pay the drivers in cash," it said.

Service Sector

Hit hard by demonetisation, the services sector slipped into contraction in November - worst slump in nearly three years - as new orders dried up and customers cut spending due to cash shortages. The Nikkei India Services Purchasing Managers' Index (PMI), which tracks services sector companies on a monthly basis, stood at 46.7 in November, down from 54.5 in October.

"The latest set of gloomy PMI figures for the Indian service sector shows that companies were heavily impacted by the ban on Rs 500 and 1,000 notes. The cash shortage resulted in fewer new business intakes, which in turn caused a fall in activity and ended a 16-month sequence of expansion," said Pollyanna De Lima, IHS Markit economist and author of the report.

Tourism

Industry Body Assocham said that popular destinations have suffered a dent of around 65 per cent in business on account of shortage of cash despite Christmas and New Year holidays. "With shortage of cash dampening consumer confidence, the ongoing tourism season is witnessing a significant dent and some of the popular destinations are reporting at least 65 per cent drop in bookings barring Goa that is catching up of late," Assocham said in December.

"According to the findings, travel trade has reported around 40-45 per cent drop in bookings for international tourists while business for the domestic travellers has gone down by well over 65 per cent," it said.

Transport

Soon after demonetisation, truckers in West Bengal claimed that nearly 90 per cent inter-state vehicles registered in the state had either gone off roads or stranded at different check points owing to currency crisis.

"Lack of currency notes of lower denominations have severely affected road transportation as entry tax payments cannot be made at check points of different states apart from several other reasons," Federation of West Bengal Truck Operators' Association general secretary Subhas Bose had said.

Restaurant Business

Post demonetisation, restaurant business in the city was also hit with people preferring not to eat out. Restaurateurs claimed that the business has declined by 50 per cent with the paucity of cash with people. "Our business has declined by 50 per cent. People still have limited cash and they are currently buying the daily essentials," restaurateur Priyank Sukhija said.

Small-scale Traders

Post demonetisation, India's retail businesses witnessed an estimated sharp plunge of 25 per cent. The Confederation of All India Traders or CAIT, said businesses "in markets across the country has reduced to 25 per cent". Indian retail trade is worth about Rs 42 lakh crore annually. Retail trade per day is approximately Rs 14,000 crore per day.

"There are around 9 lakh small traders in the city who have been hit directly by withdrawal of the notes. All the major markets including Chandni Chowk, Sadar, Lajpat Nagar, Sarojini Nagar, Khan Market, Khari Baoli have been affected as buyers have no money to spend," said Brijesh Goyal, convener of Chamber of Trade and Industry.