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