November 11, 2016
While welcoming the demonetization of Rs. 1,000 and Rs. 500, various industrial and trade associations today brought to the attention of Prime Minister Narendra Modi that the cap on withdrawal, as its sequel, will have an adverse impact on the functioning of industry and trade.
In a memorandum to Modi, the president of the local chapter of the Indian Chamber of Commerce and Industry, Vanitha Mohan, said that the associations need to bear with a certain amount of inconveniences during the transition, but would like to convey the serious concerns which will impact the day-to-day functioning of industry – especially the small and micro enterprises (SME) as well as the construction sector. These SMEs are primarily component suppliers to large and medium industries and rely heavily on cash transactions purely for ease of operation and not for tax evasion, she said.
They have been stopped in their tracks because their cash boxes have gone dry and almost all the SMEs will be paralysed by Monday, Vanitha claimed.
The ripple effect was sure to have a huge impact on overall production and due to the cap on withdrawals – a maximum of Rs. 10,000 per day and Rs. 20,000 per week – there was a severe cash crunch which was certain to have adverse effects on labour payments. A significant percentage of the workers are migrant labourers who do not have bank accounts and have to be paid on a weekly basis, the associations said.
“Saturday being the day for payment of weekly wages, we are at a loss to find a way out to make the payouts. We just have one more day to come up with a solution to our problem. We seek your immediate intervention to facilitate the same so that the SMEs don’t come to a grinding halt on account of non-payment of wages,” they said.
“We are sure you would understand our predicament and do the needful to avert a dire situation. We look forward to a positive reply from your good selves at the earliest,” the associations said.
Nine associations related to the textile industry, SIMA and SISPA, manufacturers such as COINDIA, COSIEMA, SIEMA and realtors CREDAI are signatories to the memorandum.