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Demonetization caused Double-digit De-growth in Two and Three wheeler industry: Rajiv Bajaj

“There has been a double-digit de-growth of the industry purely and directly as a result of demonetization. I am personally, surprised that not enough people are standing up and saying anything”

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Bajaj at Sirifot stadium (file photo, image courtesy- wikimedia commons)
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Mumbai, Feb 18, 2017: Industrialist Rajiv Bajaj on Friday blamed the government’s demonetization drive for causing a double-digit de-growth for the industry and job losses.

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“The experience of Bajaj (Auto) has been no different from that of the industry as far as the demonetization is concerned,” Bajaj, who is the Managing Director of two- and three-wheeler major Bajaj Auto, told NDTV Profit in an interview.

“It (demonetisation) has hit us hard, whether it is the motorcycle industry or the three-wheeler industry. Especially so for the three-wheeler industry which is cash dependent.” “There has been a double-digit de-growth of the industry purely and directly as a result of this (demonetisation). I am personally, surprised that not enough people are standing up and saying anything.”  Besides de-growth, Bajaj blamed demonetization for job losses.

“A large supplier of mine who supplies to Bajaj and others like Yamaha and Honda told me in December that he alone had to let go 3,000 people as a result of the downturn in demand across all his customers,” Bajaj pointed out.

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A day earlier, Bajaj had termed the demonetization drive as a “wrong” idea.

“If the idea (demonetisation) is not working, don’t blame execution. I think your idea itself is wrong,” Bajaj said at the annual Nasscom leadership forum which was held here on Thursday.

On November 8, 2016, Prime Minister Narendra Modi announced the demonetization of Rs 500 and Rs 1,000 currency notes. These were replaced by new notes of Rs 500 and Rs 2,000 denomination notes.

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As per the data available with the Reserve Bank of India, 84 per cent worth of total currency under circulation at the time of November 8 announcement was demonetised. (IANS)

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The Answer to The Impending Questions On Demonetization Are Here

While it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

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Indian Currency. Pixabay

Nearly all of the currency removed from circulation in a surprise 2016 attempt to root out illegal hoards of cash came back into the financial system, Resever Bank of India  has announced, indicating the move did little to slow the underground economy.

Prime Minister of India, Narendra Modi’s currency decree, which was designed to destroy the value of billions of dollars in untaxed cash stockpiles, caused an economic slowdown and months of financial chaos for tens of millions of people or demonetization.

Modi announced in a November 2016 TV address that all 500-rupee and 1,000-rupee notes, then worth about $7.50 and $15, would be withdrawn immediately from circulation. The banned notes could be deposited into bank accounts but the government also said it would investigate deposits over 250,000 rupees, or about $3,700. The government eventually released new currency notes worth 500 and 2,000 rupees.

 

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An activist of Congress party hold the banned 500 and 1000 rupee notes.

 

In theory, the decree meant corrupt politicians and businesspeople would suddenly find themselves sitting on billions of dollars in worthless currency, known here as “black money.”

“A few people are spreading corruption for their own benefit,” Modi said in the surprise nighttime speech announcement of the order. “There is a time when you realize that you have to bring some change in society, and this is our time.”

But even as the decree caused turmoil for those in India who have always depended on cash — the poor and middle class, and millions of small traders — the rich found ways around the currency switch. In the months after the decree, businesspeople said that even large amounts of banned currency notes could be traded on the black market, though middlemen charged heavy fees.

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Prime Minister Narendra Modi along with mayor, flickr

The reserve bank of India report said in its Wednesday report that 99.3 percent of the $217 billion in notes withdrawn from circulation had come back into the economy. Some officials had originally predicted that number could be as low as 60 percent.

Also Read: Diverse Gathering To Be Addressed This World BioFuel Day: PM Narendra Modi

“Frankly, I think demonetization was a mistake,” said Gurcharan Das, a writer and the former head of Proctor & Gamble in India. He said that while it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

“You can’t overnight change that in a country which is poor and illiterate. Therefore, for me it’s not only an economic failure but a moral failure as well,” Das said. (VOA)