While demonetization is expected to be a great reform in the long-term, in the short-term, it has left many in a hassle. From small and medium enterprises, starting from the day to day operations to big decisions like to expand the business, everything has been badly hit. While in the business, we never classified a right way and a wrong way of doing it, demonetization has disrupted operations and shuttered down many factory sheds. Currently, many seasonal businesses are going through a rough patch as it had an immediate impact on them. While it is true that businessmen will learn a lesson of going strictly by the books, all the ‘Jugaads’ that used to happen for business survival will come to an end. If this is the end outcome, experts share that getting everything done by Jugaad is a genuine challenge for almost all the businesses. If demonetization is able to shake it up, it will be a very good move for the entire business sector.
Talking of an immediate impact, seasonal industries like a wedding and greeting card manufacturers in areas like Delhi are facing problems in paying petty cash to pay printing labor and many others involved in the process. These labors depend only on these daily wages and in such a scenario, they are the ones suffering. These manufacturers are also dealing with a major business loss, as a lot of clients and customers whose orders are already complete are calling off, as they don’t want to or are not having the ability to pay in cash. For the upcoming season, a lot of manufacturers have already placed bulk orders from China, where they have paid for them in advance. When these orders will reach India, it will be a tough situation for them as cash will no longer be around to buy them. It is emerging as a threat to business survival.
In small and medium enterprises, around 70-80% of the work is done through cash. In small businesses the workforce is majorly labor class. They travel from different states for work and most of the times don’t have a banking history. Some of them do not even have Adhaar cards. In the small industries, 80 to 90 percent work culture is based on cash and our labor class is still far apart from the process yet. While the move has a mixed impact as it helped a lot of people to open bank accounts, something will have to be done for the labor class. Small and medium enterprise owners have requested the government to take systematic reforms. A lot many time even those who do not prefer selling without a bill, adjustment requests come from the dealers. In such scenario, they have no choice, but continue in the same manner and end up doing adjustments else the manufacturers’ sales will decline. Good part is that this shake will push businessmen to do business in white. If from the top to bottom these practices are brought into action; we will be witnessing a completely transformed business environment. In a business environment, the work culture has been of majorly transacting in cash. A lot goes under the table. Hopefully this practice will come to an end!
Thus, it is just a transition phase, where initial shakes will end up in a lot of inconvenience. It is an opportunity for SMEs to digitize themselves and turn fully bankable. It is advisable that instead of keeping the shutters down, SMEs should be preparing themselves for these changes and come out with shining colours!