With demonetisation and the consequent weak consumer demand severely hitting the operations of traders in the country, the Confederation of All India Traders (CAIT) urged Finance Minister Arun Jaitley to bring out measures to intensify adoption of electronic payments as well as ensure smooth flow of currency to traders and consumers.
The CAIT has suggested that special camps similar to the ones organised for filing of IT returns, be organised in the markets with help of local Trade Associations for disbursement of currency. It said retailers who have direct connect with the consumers may also be authorised to accept currencies of high value denomination from consumers subject to necessary identification documents — which in turn may be submitted to the Banks by retailers for replacement of currency, CAIT said in a statement.
Such a step will bring normalcy to the markets and will reduce the pressure on the Banks, it said. Post-demonetisation, the trade in the markets across the Country has reduced to 25% in comparison to normal days.
It is estimated that Indian retail trade business is of about Rs 42 lakh crores of rupees annually or approximately Rs. 14,000 crore per day. Of this, about 40% trade is conducted through Business to Business (B2B) and the remaining 60% is conducted through Business to Consumer (B2C) activities, CAIT said. Also, The 60% of the total retail trade is in urban areas whereas rest of 40% is in rural areas.
CAIT pointed out that rural retailers from taluka and other moffusil areas who generally visit nearby district markets for procurement of goods are not doing so for want of sufficient funds of acceptable denomination. Mandis across the country had a very less business as farmers who had brought their produce for sale in the market could not get money against their produce due to non availability of smaller denomination of notes. The logistic sector has come to a standstill as the truck drivers had only high denomination notes, CAIT said.
Demonetisation has prompted many people who were earlier not using digital payments, to download various applications on their mobiles to make payments, it said, adding that to encourage widespread usage of digital payments, the goverment should subsidise the transaction cost being charged by the Banks on usage of debit and credit cards. The Banks should be advised not to charge any transaction cost, it added. The government should also announce incentives for usage of card payments, CAIT said.
It has further suggested waiver of KYC norms for Micro merchants whose per month card volumes are below Rs.50,000 and have accounts with PSU/Cooperative Banks/Grameen Banks. It also urged that the Government should consider a waiver/reduction in import duties for Point of Sale Terminals. There should also be a ‘Make in India’ drive for POS and other mobile based payment acceptance technologies, CAIT suggested. Improving broadband connectivity in small towns and rural areas will facilitate digital transactions, it added.
The National Payment Council of India (NPCI) should be made an independent regulator and a separate body for Rupay may be constituted for its greater usage, CAIT saidSapan Gupta, Partner, Shardul Amarchand Mangaldas and Co said demonetisation of old Rs 500 and Rs 1000 notes is no doubt a visionary move but its impact is directly proportionate to the manner in which the transition is executed.
“The government will need to ensure the necessary infrastructure is put in place at the earliest possible to really achieve its targets,” he said.
