Demonetisation for Jewellery Industry: Then & Now

It’s been a year since the demonetization decided to implement demonetization. Hers’s a look at what worked and what didn’t.

: IJ News Service
18 November 2017 4:44 PM
Reference: 11137

On 8th November 2016, the government surprised the entire nation by cancelling Rs. 50 and Rs. 1000 currency notes. The decision came as a big shocker for everyone in the country. It not only affected a lot of industries but also disrupted day-to-day of lives of people. However, at the same time, this momentous decision helped unorganized industries move towards formal economy. 

The Move:

Rs. 50 and Rs. 1000 currency notes were demonetized. Thus, almost 86 per cent of currency suddenly became worthless paper.

The Aim

  • Reduce corruption
  • Force those who have hoards of black money to deposit it in banks
  • Eliminate terror funding
  • Encourage digital payments
  • Move towards cashless economy

Effects

  • Domestic demand for gold items suddenly increased
  • Initial euphoria which led to rush for gold was followed by quick halt in buying due to cash crunch
  • Jewellery markets like Zaveri bazaar in Mumbai and Zohri Bazaar in Jaipur literally came to a standstill in the following days, post 8th November 2016
  • Thousands of unskilled labourers moved away from jewellery centers like Mumbai, Jaipur, Surat, etc. due to non-availability of work
  • Gold demand in India, which is next only to China, tumbled to the lowest in seven years in 2016 to 666.1 metric tons.
  • Smuggling came down drastically

Now

Changes

  • Great transparency with the shift to digital payments
  • According to reports, cash payments in the urban areas have come down to 40 per cent
  • Privacy is now history
  • Structural shift in demand for organized players leading strong sales; stocks of Titan Industries, PC Jewellers, TBZ increased
  • Purchasing power of people has come down; however, there has been a marginal improvement in the business post relaxation of the PAN card requirement for cash sales above Rs. 50,000
  • More of need-based jewellery buying is taking place
  • Organised jewellery trade is flourishing
  • To some extent, unaccounted over the counter sales are still happening at retail level

Keywords : demonetisation

Be the first to comment

Leave a comment

*Your email address will not be published