The construction sector in Andhra Pradesh is in a wait-and-watch mode as demonetisation of old currency notes has caused a severe cash crunch, impacting both the flow of capital into projects and payments to the workforce.
Its financial implications are being studied as it is just a week that has passed after the monetary system started being refurbished by the new Rs.2,000 and Rs.500 notes. Scarcity of new currency notes, as a consequence to the Prime Minister’s announcement on November 8, has come as a severe blow for those planning to buy flats, besides preventing the builders from pumping in funds into the ongoing projects.
However, the builders have not yet been able to figure out a pattern as a majority of the payments are made electronically or through cheques.
Capital Region Builders’ Association president N. Durga Prasad told The Hindu that the scenario was bleak as withdrawal of old currency notes injected an element of uncertainty into the construction business.
“For the time being, there is not much problem as far as small projects are concerned. This is because we have already invested money and the customers too managed to arrange funds for buying properties costing around Rs. 40 lakh or even Rs.50 lakh,” Mr. Prasad observed.
Demonetisation is certainly a big problem when the cost of projects is higher as the mandatory procedures involving banks and other departments to be followed are time-taking.
In fact, the higher the cost the brighter the chance of customers postponing their buying plans. Those who have already put their arrangements in place well before demonetisation are an exception.
“The root cause of the slump is the impediments to taking one’s own money out of banks and ATMs. But once liquidity in the system improves, the situation will certainly improve,” asserted Mr. Prasad. He added that the demand for flats was set to increase once the present crisis subsided .
