Confederation of All India Traders (CAIT) suggested multiple options to Finance Ministry to deal with the ongoing issue of cash-crunch, smooth implementation of demonetization and minimize the chaos surrounding it. It is worth noting that since the scrapping of Rs 500 and Rs 1,000 notes, the retail trade in the country has reduced to around 25% in comparison to any normal day. Subsequently, the CAIT is also struggling with weak consumer demand and this denomination drive has hit them really hard, to manage the situation CAIT has suggested measures such as to intensify adoption of electronic payments as well as ensure smooth flow of currency to traders and consumers.
Camps Similar to filing for IT returns, special educational as well as help camps should be organized in the markets with help of local Trade Associations for disbursement of the currency.
The CAIT also suggested that retailers with direct connect to consumers should also be authorized to accept currencies of high value denomination subject to necessary identification documents — which in turn may be submitted to the Banks by retailers for replacement of currency. This massive help drive may bring normalcy to the markets and will reduce the pressure on the Banks.
CAIT mentioned that due to currency crunch, rural retailers are not able to purchase sufficient amount of goods, logistics as well as farming businesses have suffered immensely due to this sudden demonetization move. It is estimated that Indian retail trade business is of about Rs 42 lakh crores of rupees annually or approximately Rs. 14,000 crore per day. Of this, about 40% trade is conducted through Business to Business (B2B) and the remaining 60% is conducted through Business to Consumer (B2C) activities, CAIT indicated. Also, The 60% of the total retail trade is in urban areas whereas rest of 40% is in rural areas.
The CAIT suggested that to encourage widespread usage of digital payments, the government should subsidize the transaction cost being charged by the Banks on usage of debit and credit cards. The Banks should be advised not to charge any transaction cost. The government should also announce incentives for usage of card payments.
It has further suggested waiver of the KYC norms for Micro merchants who’s per month card volumes are below Rs.50, 000 and have accounts with PSU/Cooperative Banks/Grameen Banks. It also urged that the Government should consider a waiver/reduction in import duties for Point of Sale Terminals. There should also be a ‘Make in India’ drive for POS and other mobile based payment acceptance technologies, CAIT suggested. Improving broadband connectivity in small towns and rural areas will facilitate digital transactions, it added.
The CAIT said that the government will need to ensure the necessary infrastructure is put in place at the earliest possible to really achieve its targets.