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Many traders say that after demonetisation cash in the market has drastically reduced
Every year before Diwali, Prakash Maurya, an auto parts shop owner in southeast Delhi, and his wife would sit in an hour-long talk with his family to decide who should do what during their trip to Chandni Chowk and Sadar Bazaar, the capital’s two biggest wholesale markets.
While his two sons would buy lights and firecrackers, his wife and daughter would purchase utensils, festive knickknacks, and candles.
Maurya himself would be left with the most difficult task of finding a parking spot in the Old Delhi area.
However, things are different this year. Still unable to recover from the sting of last year’s demonetisation, Maurya has turned abstemious.
“I am not spending even half of what we did last year on Diwali. I do not have much cash, because I lost a lot of customers,” he said.
Wholesale hubs across India are missing thousands of such customers. Many are complaining that the knock-on effects of demonetisation and now the Goods and Services Tax (GST) have cut the flow of liquidity to the markets.
Traders say sales this Diwali, which, they say, are down to 60 per cent, would be the worst in the past five years.
“Market sentiment is at an all-time low. Wholesale trade in India is worth over Rs 40 lakh crore.
Last year during the month of Diwali, the market did a business of Rs 3.5 lakh crore, but this year we think by the end of October, sales would be down to Rs 2.5 lakh crore, if not less,” said Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT).
Many traders say that after demonetisation cash in the market has drastically reduced.
Also a GST of 18 per cent has further dampened festive sentiment. Many have also, out of fear of not breaking even, reduced the stocks they order during Diwali.
“People are just not buying. In Uttar Pradesh, Diwali is the biggest festival, but neither are they buying gold for Dhanteras or anything else for that matter.
Traders who used to take short-term loans to stock up are not even investing the capital they have.
The jewellery market here normally does a business of Rs 100 crore during Diwali but it might just about manage to reach Rs 60 crore (Rs 600 million) this year,” said Pankaj Arora, a jewellery trader in Kanpur.
Traders also say that Diwali shopping, which is mostly done by women members in the family, are affected most by demonetisation.
“Women in the family lost a lot of money to demonetisation. With their liquidity gone we lost a large chunk of our customer base. Also the GST of between 18 per cent and 28 per cent is affecting trade.
The government needs to come out with some relief measures, or else the ripple effect would be felt next year as well,” said Pramod Bhagat, a machine parts wholesaler in Surat.
Photograph: Danish Siddiqui/Reuters
