One year post-demonetisation, public opinion in Agra still far from positive

With PM Modi's highly disruptive economic experiment of demonetization completing one year on November 8, the general public's opinion about this major upheaval is far from positive in Agra, where both the footwear and marble handicrafts industries are yet to recover from it. The implementation of GST in these difficult times has only served to further push the economy of this city past the brink.

The footwear industry of Agra employes nearly 70 per cent of the city's population either directly or indirectly and a large number of these comprise of daily wage labourers and craftsmen, most of whom lost their jobs within a week of demonetisation. Exporters did not suffer much from demonetisation but the domestic footwear market was completely shut down as most of this market thrived on cash transactions.

Consequently, the Agra shoe market which traded more than Rs one crore worth of footwear every day, came down to less than Rs 20 lakhs worth of business.

Park Exports Chairman Nazeer Ahmer told India Today that Agra's footwear industry holds 65 per cent stake in the domestic footwear market and 28 percent of the footwear exports, which came down drastically after demonetization. In the past year, the total footwear export was around Rs 2800 crore which is significantly less than the previous year's export figures.

He said that the domestic footwear market suffered greatly because a lot of the domestic business ran on cash and quite a number of these businesses were unregistered. As a result, these businessmen lost a great deal of money when they had to exchange the currency notes they had, on as much as 75 percent commission.

Madan Khurana, the owner of a domestic shoe factory who is also connected to the ruling BJP, said that the effect of demonetization lasted only a few days and after that the business came back to normal. He accepted that the businesses had not performed well since demonetisation but blamed this to the tendency of businessmen to conduct under-the-table transactions.

However, Nazim Qureshi, another factory owner claimed that the domestic footwear factories remained closed for almost two months post-demonetization due to cash crisis. The situation only improved after May 2017, but immediately after that the government implemented GST in July 2017 which made the future of small and cottage footwear units uncertain.

Footwear workers who used to make over 30 pairs of shoes every day in their house, with the help of their families and sold them in the market in the evening, were suddenly out of options as nobody was buying their products in the absence of a GST number. The paperwork has increased tremendously after GST and since the footwear business employs a lot of illiterate or poorly educated labour, conducting business has become very difficult.

Social activist Vishal Sharma said that it is now a widely agreed fact that the experiment of demonetisation failed to curb the spread of illicitly acquired wealth in India, which was mostly in the form of precious metals and other stuff, and not in the form of currency. Every route that the government opened to ease the troubles of genuine citizens in exchanging their currency notes, was exploited by unscrupulous elements to exchange illicit currency in bulk.

Places like petrol pumps, toll booths, and others became the favourite haunts of people seeking the exchange of their currency in return of a hefty commission. Petrol pumps that never sold more than Rs. 5-6 lakhs worth of fuel, were suddenly depositing old currency notes worth 20-22 lakhs. Although the Income Tax department has taken 27 such petrol pumps on its radar, it does not explain for the huge amounts that were transacted illegally at other similar places.

This resulted in nearly all of the currency returning to the Reserve Bank of India and the experiment of demonetization became a dark chapter in the financial history of India which showed no gains, although the losses it caused to the economy are incalculable.

According to a report of Agra banks, 6,440 crores worth of old currency was deposited in the city, while the banks distributed Rs. 1610 crores worth of new currency, exchanging 380 crores of old currency. There are 6.48 lakh Jandhan accounts in Agra banks and 22.5 lakh various other accounts. 35 thousand such accounts still have money deposited in them while rest of them are empty. The Income Tax department has issued notices to 15 thousand account holders.