The impact of demonetisation has been far more on enterprises integrated with the rural supply chain or informal sector and not so much on large supply chain, says Anil Bhardwaj, Secretary General of the Federation of Indian Micro and Small & Medium Enterprises.
In an interview he also shared his outlook on how jobs in the sector would be hit by the demonetisation move.
Q: Your is an organisation which has about 740 small and medium-sized enterprises (SME) associations under the umbrella, can you tell us very clearly straight away what percentage of your organistaions are impacted and to what extent, to what degree?
A: The impact has been widespread and I think there is hardly anyone who has gone unaffected by demonetisation and surely almost all segments in the micro, small and medium enterprises (MSME) sector have been affected. Now the impact has been layered of course, there are certain sectors which are comparatively less impacted especially those that are part of large supply chains and organised sector.
The ones that are part of more connected to or integrated with rural supply chain, informal sector they are greatly impacted because most of their transactions whether buying raw material, paying wages or selling their goods everything is in cash. Once cash has been taken out of the system their economic activities have come to standstill or are affected very adversely.
Q: What percentage of your members has been affected?
A: Estimates are that almost 80 percent of MSME sectors would have been affected in different degrees. However, this is primarily because cash as been withdrawn.
Q: On an average what would be the extent of the hit on the business?
A: That is little difficult because you need to really go into details. That is what I said if the sectors that I have been in operating informally they are affected more than the once that are part of larger supply chains or they are part of the online sector.
Q: One would believe that the organisations under your umbrella bulk of them are in the informal segment?
A: That is right; almost 90 percent would be in the informal sectors.
Q: The impact would be large, you said it varies?
A: Yes, it varies but it is widespread.
Q: Just wanted to understand if you can give us a breakup in terms of how many jobs are probably impacted in the rural space as oppose to urban at this point in time?
A: I am afraid I would not be in a position to give you the number right now but I can give you some indications. For example, if you are talking about handicrafts sector, handloom sector or sectors like glass industry, carpet industry typically where most of the people are employed on daily wages basis or piece wage basis they are hugely impacted.
The impact is not in terms of their services are completely taken out but I think they may be sent on holiday that okay you go home for 15 days or a month and come back once things are settled down a bit. Because it is not that the industry has collapsed, but because of the cash they are finding it difficult to buy raw material and give wages to the workers. So, it is temporary in many sectors. However, eventually it would depend, if it prolongs then they would be a huge job losses. There could be huge job losses if it continues for couple of quarters.
Source: Money Control
Image Courtesy: FISME
