Even while welcoming the demonetisation of existing Rs. 500 and Rs. 1,000 notes, heads of industrial associations here have sought removal of the cap on cash withdrawals by industries.
The announcement brought the entire trade and industrial activity in the city to a standstill on Wednesday, they said.
This is a week when industries disburse wages to workers. Most of them have migrant workers who do not have a bank account or receive daily and weekly wages in cash. An industry that withdrew Rs. 10 lakh yesterday to pay wages today is unable to do so as it is all in Rs. 500 and Rs. 1,000 denominations. Even if the amount is deposited in the banks, the withdrawal limit is just Rs. 4,000 and how would the industries pay the salary, asked Vanitha Mohan, president of the Indian Chamber of Commerce and Industry, Coimbatore.
“Industries, especially the small-scale units and the builders are expected to face problems on Saturday when they will have to pay the workers the weekly wages. Hence, we will send a representation to the Government on Friday seeking removal of limits on withdrawal,” she said.
The associations will also seek hand-holding and back end support so that daily business activities are not hit. The Government should ensure ease of transaction by removing the ceiling on withdrawals, the representatives of several associations told reporters here on Wednesday.
According to V. Sundaram, president of Coimbatore District Small Industries’ Association, small industries normally have a cash balance of Rs. 4 lakh to Rs. 10 lakh each. This is used for daily purchase of components and raw materials. “This is accounted money. But, when we deposit it in the bank, we will not be able to withdraw the entire amount at once.” The micro units need cash every day for miscellaneous expenses such as payment to workers for their tea, advances, and cargo movement.
Shankaranarayanan, who has a CNC operating unit, said he had deposited cash, withdrawn Rs. 10,000 and also exchanged the money with him (Rs. 4000). “I need Rs. 35,000 to pay wages to the workers this weekend. The cap on withdrawal is Rs. 20,000 a week. How will this be adequate,” he asks.
Farmers who purchases a pumpset do not pay for it through bank or card transaction. He pays it in cash. “We fear that nearly 50 per cent of our business will be hit if remedial steps are not taken,” said K.K. Rajan, president of Southern India Engineering Manufacturers Association.
