Demonetisation caused 35% job losses, 50% dip in revenue: AIMO report
Prime Minister Narendra Modi’s decision to demonetise high value notes has caused micro-small scale industries suffer 35% jobs losses and a 50% dip in revenue, says a study conducted by India’s largest organisation of manufacturers.
These adverse effects have been seen in the first 34 days since November 8, the day PM Modi scrapped Rs 500 and Rs 1000 notes.
The study, conducted by the All India Manufacturers’ Organisation (AIMO), has also projected a drop in employment of 60% and loss in revenue of 55% before March 2017. The AIMO represents over 3 lakh micro, small scale, and medium and large scale industries engaged in manufacturing and export activities.
“While AIMO understands certain immediate repercussions of such a bold step (demonetisation) by the government, it did not anticipate or was prepared for such a jolt to industries even after one month,” the AIMO said in its report.
The AIMO stated that Small and Medium-sized Enterprises (SMEs) sector was the worst-hit due to note ban move.
Some of the major findings of the AIMO study state that medium and large scale industries engaged in infrastructure projects, like as big road construction projects, reported a 35 percent job losses and 45 per cent in revenue loss.
It also said that the number of jobs and revenue are expected to further dip by 40 per cent by March this year. The factors that contributed to job loss and revenue dip include zero cash inflow, restriction on cash withdrawals, absent staff among others.
“They turned a blind eye towards this emergency situation. They simply closed their ears, kept patting themselves or their bosses. Among all the states, Maharashtra and Tamil Nadu are the worst affected. The impact in these two states is still being ignored, thanks to an inefficient government in Tamil Nadu and a Maharashtra government that is bound to support the demonetisation drive,” Raghunathan, national president, AIMO was quoted as saying.