'Demonetisation has negative impact on SMEs'

Demonetisation of high-value currency notes would leave quite a negative impact on small and medium enterprises, rural consumption and job creation in the immediate run, while the large and well organised sectors of Corporate India stand to benefit in the long-term horizon, the latest Assocham-Bizcon Survey pointed out. 

The contrast in perception brought out by the survey is quite stark. While 81.5% of the respondents felt the SMEs have been hit and would still suffer the lingering effect for one more quarter, an equal number said that for large enterprises, the unprecedented measure of the note ban, the impact would be positive.

“However, at a holistic level, a large number of respondents felt that the impact could be seen in sales volume declining in the last quarter of the current financial year. Same holds good for the order book position with investment graph not showing much of an uptick for the January-March quarter, retaining almost similar stance as in the previous quarter,” itsaid. 

Even as easing of prices in vegetables and other crops is also attributed to incidents of distress sale in the backdrop of cash scarcity, the survey found that 92% of respondents said the demonetisation would have a positive impact on inflation.

The survey does throw some paradox as well. While it said the note ban would lead to better outlook in the long run, over 66% of the responses pointed towards negative on investment, linked to issues like subdued consumer confidence and demand, particularly in the rural landscap.