While releasing the survey on demonetisation to remonetisation
process, Mr. Gopal Jiwarajka, President, PHD Chamber said that there is a mixed
response from the economists, businesses and people.
Majority of the economists (81% Respondents) have cited a
significant impact on India's economic growth in the shorter term but the
benefits of demonetization will help in sustaining economic growth in the
longer term.
Survey of economists, businesses and people on a
structured questionnaire was undertaken by the PHD Research Bureau of PHD
Chamber of Commerce and Industry during the month of December 2016.
The survey got responses from more than 50 economists and
analysts, 700 business firms and 2000 people.
In the business segment, 73% respondents are facing huge
cash crunch due to demonetization as they are unable to fulfill their daily
cash requirements to pay wages to daily wagers and contractual workforce.
Production process not only in the informal sector but
also in the formal sector has been impacted directly or indirectly, said the
survey.
Cash driven segments such as fruits and vegetable
markets, horticulture and floriculture, agricultural and food processing,
construction activities, among others have been impacted.
But the immediate effect would probably be short-lived
and the long term effect will drive the Indian economy to new areas of growth
in the coming times, said the survey study
Though the contraction in GDP cannot be ruled out due to
fall in economic activity, growth in demand will start gaining momentum once
the economy moves out of the transition stage of demonetization to
remonetisation, said Mr. Gopal Jiwarajka
It is expected that removal of black money from the
system would create a good scope for reduction in interest rates via-a-vis
lower inflationary expectations and reduce the incidence of direct taxation, he
said
While assessing the impact on people, 92% Respondents
said that the major impact of currency crunch is seen on daily needs of the
people such as purchase of eatables, dairy products and other necessities,
according to the survey
58% Respondents are facing high level of difficulty in
fulfilling their day to day activities. 89% Respondents reported unavailability
of cash at banks and ATMs as a major hurdle in withdrawing/depositing cash from
the bank/ATMs, said the survey study.
There is a need of setting up of digital literacy booths
outside banks majorly in rural regions for spreading digital literacy across
all sections of the nation, said Mr. Jiwarajka
Government should incentivize RTGS (Real Time Gross
Settlement) and NEFT (National Electronic Funds Transfer) under the ambit of
digital transfers so that more and more people adopt the available facility and
are less dependent on cash transactions.
The threshold limit of Rs. 2,00, 000 for transactions
under the RTGS and Rs. 50,000 for transfers under NEFT should be exempted from
the service tax.
Also, removal of service tax charged while making
payments through credit/ debit card or any other payment card up to Rs. 2,000
in a single transaction is a good start for the transformation of cash
transactions to the digital transfers, however, the limit could be revised to
Rs. 10,000.
Government should print more and smaller denominations
such as Rs. 50, 100 and Rs. 500 notes so that there should be sufficient
circulation of money in the market. Government needs to ensure that the
sufficient quantity of money is being transported to the banks and ATMs in both
rural and urban areas on time, he said
Facility of mobile ATMs in the Government, public sector
and private corporate sector offices having more than 25 employees in their
establishments, he added
Cash driven sectors such as constriction sector and Small
and Micro Units (SMEs) should be facilitated by expanded cash limits for the
payment of salaries of their daily wage and contractual workers, said Mr. Gopal
jiwarajka
There is a need for low interest rates to propel a boom
in Housing and Real Estate. This will substantially increase Employment as well
as contribute towards GDP growth, he said
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