Wage distribution has been disrupted in the plantation sector, trade is witnessing huge drops, construction has almost come to a standstill, the fisheries sector is in the doldrums, tourism sector is feeling the heat, houseboat business is in deep crisis and many other sectors are in some kind of a forced lethargy. Kerala on Tuesday seemed to be sliding into a crisis a week after the demonetisation of the Rs 1,000 and Rs 500 currency notes.
However, a slight drop was seen on Tuesday in the number of people queuing up at bank branches for exchanging demonetised notes for valid ones but heavy rush was witnessed at the ATMs even as most of the ATMs in the rural sector were out of cash. Also, some relief was in sight as a few ATMs began dispensing Rs 2,000 notes and bank officials said more machines could dispense these notes by late Tuesday night.
Responses to the additional controls–like the marking of fingers with indelible inks–the Centre imposed were mixed in Kerala. The general opinion was that controls were all right provided money was available for meeting requirements. “I am ready to put up with some hardships. But the Government shouldn’t forget that the money it denies me is not its money but mine. What we are seeing here is rationing of money!” said Ambujakshan, a caterer in Thrissur.
State Finance Minister TM Thomas Isaac complained that the Centre was making the situation more complex with additional controls while experts in economics and finance opined that Kerala might face a terrible situation if the cash crunch prevailed “for another two weeks or so” unlike many other states because of its peculiarity as a consumer state.
The Kerala Government fears that the demonetisation and its consequences could seriously affect its tax revenue leading to a situation where it would be struggling to meet even the primary requirements in December. The State had witnessed a 17-percent growth in tax collection in October but this is now expected to come down to less than ten percent this month.
The demonetisation of large-denomination currency notes has come at the peak of Kerala’s tourism season and the industry is experiencing its unavoidable consequences. Shortage of money in travelers’ pockets have led to sharp drop in arrivals and spending in almost all the main destinations.
“Cancellations have increased. And those who come are unable to spend money,” said an hotelier in Thekkady.
Operators say that most of the 1,200 houseboats operating from Alappuzha, known as Venice of the East, are lying idle due to travelers’ inability to withdraw money and this is affecting the related businesses as well. Tourists, including foreigners, are in a peculiar situation in which they are unable to complete their itinerary by staying back or to return, an official from the District Promotion Council said.
“Houseboats in Alappuzha do not have card-swiping facility to receive payments. I myself had made enquiries about this but the system cannot be put in place immediately like they do in the shops. In my own estimates, the losses the houseboat sector in Alappuzha has suffered in this season may come to over Rs 2 crore,” said Johnson, an operating officer with a houseboat firm.
Unable to pay the provision-suppliers, caterers, daily-wage employees and location-providers, filmmakers have started postponing projects. Superstar Nivin Poly’s new project, ‘Sakhavu’ is said to have been suspended due to cash crunch. “Some can be paid by cheque. In the case of many others, it won’t work,” said a production controller with the Malayalam film industry.
Traders said business in the market, mainly the retail sector, had suffered a huge drop. They said they were hit mainly by the shortage of notes of small denominations like Rs 20, Rs 50 and Rs 100. “Indeed, card transaction is a way out. But how many markets in rural Kerala are run on swiping machinesIJ” asked Davis Varu, a retail merchant in Thrissur.