With construction sector hit hard due to demonetisation, steel, cement, non-banking finance, transport, and other sectors apprehend dull business in the months ahead.
The decision came as a bolt from the blue for the realty sector with construction activity almost coming to a standstill. The steel industry, already faced with tough challenges due to world-wide slump in the industry and dumping of cheap steel by China and the Commonwealth of Independent States, expects net losses during the third quarter.
The jewellery and garment sector is also facing the heat. The famous jaggery market at Anakapalle has been temporarily shut down.
With curbs on withdrawal of money from banks continuing, the crisis is expected to continue for another month or two.
Sources say steel and cement sectors have witnessed almost 70 per cent fall in sales in the past few days.
By and large, all the industrial managements welcomed Prime Minister Narendra Modi’s decision to declare a war on black money.
At the same time, they think something is missing in implementing a contingency plan to cope with the situation. post-demonetisation.
Net loss
The Rashtriya Ispat Nigam Limited, corporate entity of the Visakhapatnam Steel Plant, recorded a net loss of Rs.1421 crore during 2015-16, first time after a gap of 13 years due to volatile market and flooding of domestic market with cheap steel. After demonetisation, its impact on construction sector will reduce the demand for steel for all the major producers including SAIL and JSW.
“Steps are required to mitigate the currency crisis. Moreover the transformation from cash economy to banking economy and emphasis on use of digital transactions will bring into focus the demand for measures on cyber security,” said Confederation of Indian Industry zonal chairman V. Murali Krishna.
He told The Hindu that on whole the decision on demonetisation was praiseworthy as it would paralyse the circulation of black money and terror funding.
AP Chambers of Commerce & Industry Federation State president-elect G. Sambasiva Rao said the problem faced now was temporary and hoped that after a few days, the government would set right the system to ensure buoyancy in the economy.
