Demonetisation and industrial woes

Season of discontent

Goa attracts a little short of four million tourists every year, from India and around the world, most of them in the December–January ‘Season’ (as locals call it), peaking in the Christmas–New Year week, with an even higher spike around New Year.

Once the secret paradise of the hippie generation, Goa’s 106-kilometre coastline, laid-back atmosphere, and liberal liquor policies have made it a mainstream holiday destination. Aside from hordes of domestic tourists (and some long-haired but now-greying peaceniks), you’ll also see urban hipsters from every metropolis, middle-class, retired Europeans escaping from harsh winters, super-fit Israelis looking to go a little wild after mandatory military service, gap-year backpackers; name the stereotype and you’ll find them here. Tourists bring Goa between Rs. 700 and 800 crore of revenue (and foreign currency for the national kitty), significant for a tiny State with an annual budget under Rs. 12,000 crore, according to Goa’s Commissioner for Commercial Taxes, Deepak Bandekar. This does not include the very high level of direct and indirect employment and self-employment the industry generates.

Larger players have moved in — every five-star chain has a presence there — but there is still a vast informal sector for whom Season is lifeblood. These include guesthouses and homestays, ‘shack’ restaurants (licensed eateries in temporary structures built for the Season; there are approximately 365 up this year), taxis, scooter rentals, guides, and joy ride operators. Aside from local entrepreneurs, seasonal migrants get a piece of the action too: they work in short-term jobs in shacks and restaurants, sell things — handicrafts, garments, souvenirs — in the flea markets, or offer services like henna ‘tattoos’ and massages on the beach (and, it must be said, recreational substances). For all of them, demonetisation is a disaster.

Vacant rooms, empty tables

“Our business this year anyway started late due to delay in allotment of shacks,” says Cruz Cardozo, president of the Shackowners’ Association. “Now, with demonetisation, we are crushed. A lot of tourists have cancelled their visits. Many of the charter flights which bring budget tourists have been cancelled. The tourist who came to a shack to eat tiger prawns before is now ordering veg fried rice!” Business is down 50 per cent on average, he says, and he is pessimistic about it picking up during Christmas week or later.

Serafin Cota, who runs a restaurant in South Goa, and is former president of the Small and Medium Hotels Association of Goa (SMHAG), which also represents homestays, says that the 50 per cent figure is true for his segment of the industry too. European budget travellers are staying away, he says. “It’s not that they do not carry cards, but compared to Indian tourists, they use them even less at guesthouses, homestays, shacks and shops.” Mr. Cota says that British tourists he knows, who come every year for months at a time, are shortening their stays. “This Season is doomed for us small hoteliers.”

“We are destroyed right in the middle of Season,” Vincent Fernandes of Candolim, North Goa, says, “And Christmas and New Year are looking bleak.” He and his daughter Leeza run Vincent’s Shack, one of the 200-plus that come up in the Candolim–Calangute stretch, North Goa, every year. After the setback of delayed shack licence allotments, demonetisation hit, and business is at a standstill. Ms. Fernandes says that they have managed to rent out a few rooms, but their regulars, who stay for three- to four-month stretches, have either cancelled bookings or postponed trips hoping the situation improves.

Similar worries furrow Michael Fernandes’s brow. He runs a shack in Colva, South Goa, and he fears he will not make enough to pay the migrant workers, mainly from Odisha, he hires each Season. Already burdened by the hike in various fees for shacks (now around Rs. 1.26 lakh), demonetisation is just one more catastrophe. “If currency does not become freely available for tourists, we will be doomed. I don’t think I will be able to continue running the shack beyond February.”

Paul Lobo, of Cavelossim, South Goa, says that only three of his 12 rooms are occupied; he is relieved that at least he has that many, after regulars cancelled bookings because of the cash crunch. Mr. Lobo says his current guests are severely curtailing causal spending, even on things like soft drinks. Menino Barreto, also of Cavelossim, is one of the few who currently has all his rooms full, thanks to prior bookings. But, he says, he feels bad for his guests, who are spending most of their vacation time hunting for cash.

Jitu Simepursekar’s three rooms at Calangute are finally full, a month since the demonetisation announcement. “Business is down over 50 per cent. Tourists come, but they ask for swipe machines. We deal in cash; they don’t have cash and are fed up of standing in queues for hours, not even sure they will get money at the end.” His neighbour, Rafael Fernandes, who has eight rooms, is worse off: “I get more Indians than foreigners, but Indians only stay two, three days. Foreigners, who stay longer, are calling and cancelling. I have seen them getting frustrated with not getting cash or getting [lower than the formal exchange rate] from private dealers.” Donaldo Coelho, of O! Pescador restaurant, Calangute, who has been in the business for over 20 years, says he has been getting calls from his European regulars cancelling holidays, after reading about the currency crisis.

“Indians who are known to spend money are facing the cash problem,” says John Peres, of Antonio’s Shack, Candolim. For shack-owners and small hoteliers, the note shortage means they can’t pay suppliers. Salaries are an issue too: “Employees from other States can’t be let off, because it is Season.”

In Betalbatim, South Goa, the expected Russian and U.K. tourists have arrived. “But they come with Rs. 2000 notes, and we don’t have change to give them,” says shack-owner Inas Marian Fernandes. “The local bank gives Rs. 6,000 when we ask for our Rs. 24,000 weekly quota. Every day I go to Margao and nearby markets, write cheques and collect change in 100-rupee notes from the shops and small vendors. That is how many of us are managing.”

At Palolem, near Goa’s southern tip, a more recently ‘discovered’ beach, with nearly 100 shacks, the situation is not so bad, says Amol Dias, a shack owner: things have improved after the grim fortnight that followed Mr. Modi’s announcement. “One advantage we have here is that we get local customers also coming in. But some foreigners and even domestic customers are still complaining that they have to stand in bank and ATM queues.”

Collateral damage

If things are looking bad for the informal hospitality business, it’s far from good for other small entrepreneurs. As Mr. Cota of SMHAG says, angrily, “Ask the fellows who do massages, haircuts for tourists: they will tell you how their business has come to a grinding halt.”

Goa has around 10,000 taxis. Taxi operators from the busy north coastal belt say business is down 30–40 per cent. Vinayak Nanoskar, a taxi operator, says that this is natural: tourists are prioritising food, so will go to the nearest bar or restaurant instead of hiring a taxi to hunt for good food, as they used to. Ravindra Vengurlekar, another operator, says, “The biggest problem we face is when for a rental of Rs. 600–700, tourists flash 2,000-rupee notes and expect us to give them change.” Mr. Vengurlekar says ATMs in Baga and Calangute have smaller queues now, so he is hoping Christmas week will be busy.

Street markets, even in the Candolim–Calangute hotspots, are seeing low sales. Shantabai, a street vendor in Calangute, says, “People come, stare at our wares, but when you ask them to buy, they give a common answer: “No change to buy.” If December passes like this, we are destroyed right at the peak of Season.”

In Panaji’s municipal market, the story is slightly different. Iqbal Nadam, a fruit vendor, says that while business is better than it was in November, sales are still down. “Our problem is how to handle supplies from Belgaum and Bangalore. They insist on cash, but we are not making enough cash. We have never used credit cards or even cheques. I really do not know what this government is talking of with cashless Goa.”

The providers of beach-side services — parasailing, water-scooters and boat rides — are not suffering equally. Bigger operators, who usually sell tickets out of plush offices, declined to go on the record, but said there were ‘minor inconveniences’ thanks to the note ban. In any case, they say, their customers are happy to swipe a card. (Most of the tourists The Hindu spoke to, domestic and foreign, said that while they were happy to pay with plastic, they were hardly likely to carry cards to the beach.) Smaller independents are more vocal: it’s horrible, they say. “Business has been shattered,” says Mohammad Kadir, who works on a boat, “Tourists preserve cash for food.” The boat’s owner, Narayan, who is also a DJ, says, “Forget boating, no disco, no casinos too.”

Paradise ruined

“It is just crazy,” says Susan Moretti from Italy, who is holidaying at Anjuna. “We can’t change money; we have to come to the city for that, and we only get small currency if we are lucky. It is awkward, especially on a holiday.”

Heache Heather, a British tourist at Candolim with his wife, says that even after hours in banks, they can’t be sure how much cash they get. “We have been coming to Goa since 2000, and we never faced this kind of situation,” he says. Instead of going out every night, which they love, all they can do sun-bathe on beach beds. He says it makes them sad to not be able to tip waiters. “We don’t like this money problem of yours.”

“Initially, the situation was pretty bad,” says Anthony Marsh, 72, a British tourist. “But some intelligent people got business, as they accepted the old 1000- and 500-rupee notes.” Mr. Marsh has been visiting India for nearly 40 years and has been holidaying in Goa since 2000; while he won’t stop coming, he wishes some tourist-friendly measures had been taken, like a separate queue for foreigners so they do not waste vacation time standing outside banks. Locals who know their way around frequently break queues, he grumbles.

Stanley Gibey, an English tourist on a long holiday with his wife in Cavelossim, says he is quite fed up. “I do not know how things will pan out. We have money, but every morning we must queue at the bank, but get just Rs. 2,000; every day the same routine. This money situation is helping nobody. We love to come to India, but if this continues, I am afraid the holiday will not be enjoyable anymore.”

At Calangute, Simon and Carol Bray from Yorkshire are on their third Goa trip. “Some people are exploiting the situation,” Mr. Bray says. Private foreign exchange dealers are offering as little as Rs. 70 for the British pound; the only option is to queue up at banks. The Brays are considering cutting their three-month holiday down to two or three weeks.


Not everyone is in mourning, though.

State-owned Goa Tourism Development Corporation Limited (GTDC) chairman, Nilesh Cabral (who is also an MLA), is happy: “GTDC moves ahead of time, and I am extremely pleased that GTDC introduced cashless transactions several months ago.”

GTDC already has a web portal and an app. Gavin Dias, GTDC’s General Manager (Hotels), says, “All our residences now have point-of-sale (POS) machines to facilitate cashless payments, and most tourists prefer to use this.” GTDC’s portal also links another 160 hotels, and channel managers like Staah and Maximojo; the company is in talks with leading e-wallet providers as well. Its aim is to make all tourism services digital, in line with the government’s December 31 deadline for turning Goa into a cashless State. That can only happen if GTDC and government work together, not just to ensure that all tourism stakeholders buy in, but to help with the process.

Gaurish Dhond, owner of a Panaji hotel and a senior office-bearer of the Travel and Tourism Association of Goa (TTAG), which represents the State’s travel and hospitality sector, says the industry has not been much affected. “Goa is a tourist destination. People come with planned holidays and advance bookings.” He cites the International Film Festival of India in late November as an example, saying that hotels in and around Panaji were booked solid. Hotels are fully booked for the Season, he says. “In the short run, yes, Goa tourism will be affected to some extent, but unorganised players who do unregulated business will fall in line. Overcharging of customers will also be reduced if you have to operate on machines.” This can’t happen overnight he admits; it will take three or four months.

Francisco de Braganca, a past president of the TTAG, says, “Domestic tour operators will suffer in the short term for lack of liquidity. Larger tour operators and travel agents are long-term players, as are charter operators; they get their bookings more than six months, even a year in advance. The top end of the market, which is systems-driven and has online payments, won’t be affected. In fact, they are doing better business than before.”

What of the small players? Mr. Braganca is not sympathetic. “Goa has over 13,000 unregistered rooms, and these people pay no taxes, nothing! A white economy will improve the State’s tax revenue; businesses which now have an unfair advantage will be on the same playing field as the organised sector. Some of these fellows like shack-owners don’t even take a liquor licences yet sell liquor. How fair is it? They will all fall in line.”

Mr. Braganca agrees with the Prime Minister’s assertion that demonetisation will weed out corruption. “However, the implementation is inefficient.” In the short term, he says that establishments that do not have POS machines or online payment facilities will be severely affected. He expects the slump to last beyond Season: “At least five to six months could be pretty bad.”

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Printable version | Dec 1, 2021 4:41:56 PM |

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