Demonetisation of Rs.500 and Rs.1000 currency notes has dealt a blow to the hectic business that the Mahbub Mansion market yard (also known as Sri Krupa Market) witnesses, affecting especially traders and commission agents who earlier conducted cash-based trading of commodities.
Paucity of currency in circulation has resulted in fewer footfalls of retailers and grocery shoppers into the market. It already has quite a few traders mulling bringing in the Point of Sale (PoS) machines.
“I have already applied for a PoS terminal, and hoping to get it sooner. The business is very dull for us. Not even 50 per cent of the earlier trading is possible now,” lamented Bhavesh Patel of Sri Tirumala Traders in the market, who trades wholesale in garlic.
Dozens of bags of garlic lie unsold in his shop. On a normal day, he would sell 80 to 100 bags, but now the business has dropped to as low as 20-30 bags, he says.
Interestingly, the Rs.3-crore worth business officially clocked on an average day by the 150-odd authorised commission agents in the market yard has prompted very few of them to install the PoS terminals till the demonetisation move was announced. The transactions, mostly on onion, garlic, tamarind, potatoes and grains, would be entirely carried in cash, be it payments or receipts. According to the Market Committee officials, the annual value of transactions in the market amounted to Rs.800 crore on record.
“Many commission agents would begin their business without a penny in hand. After the deal is struck, financiers would arrive with cash, through which payments would be made. Demonetisation has applied brakes on this, because the financiers do not have new currency,” explained K.Raja Sekhar Reddy, Deputy Director of Marketing.
However, the traders are not unduly worried about payments to farmers, as most of those visiting the market are not farmers, but middlemen with whom they already have a tacit understanding.
What is worrisome to them is the reduced quantities purchased by retailers.
“The business is down to a fourth of what it used to be. We are not accepting Rs.500 and Rs.1000 notes, as exchange is not possible, and there are long queues at the bank for depositing.
Where we have trust, we are accepting cheques. With reduced business, retailers too have grown cautious about the quantities they buy,” says K.Bhaskar, a grain merchant.
The Tamilnad Mercantile Bank where he has an account, has recently visited with the proposal for installing PoS terminals, which Bhaskar is more than willing to accept now.
The business is down to a fourth of what it used to be as traders are not accepting demonetised notes
