Influence of Demonetisation on Unorganised Retailers

Abstract

Demonetization has impacted the retail industry due to a liquidity crunch. As the Indian retail industry generates a lot of cash transactions, a reduction in sales will continue in the short-term, i.e. one-two quarters. This impact is being felt largely by small traders and the unorganised retailing segment prevalent on many high streets across the country, as compared to the organised retailing and malls. India has amongst the highest level of currencies in circulation at 12.1% of GDP. Cash on hand is an estimated at around 3.2% of household assets, higher than investment in equities, or roughly around $220 billion. Of this cash, 87% is in the form of Rs 500 and Rs 1,000 notes or roughly Rs 14 lakh crore ($190 billion). A significant portion of the household cash on hand is generated by economic transactions that are not reported to tax authorities or generated through corruption. Scrapping the higher denomination money would either result in these being brought into the system or the money just disappearing. The current study is on the influence of demonetisation on unorganised retailers in pathanamthitta district of Kerala.20 traders and 100 customers were chosen for the study. Data was collected with the help of interview schedule. Data was collected during the month of December 2016. Data was analysed with the help of statistical package. Results of the study reveal that small unorganised retailers were severely hit by the demonetisation. Most of the customers are not using the financial apps because they don’t know how to use it.