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One Year of Demonetization. Here's What #10 Leading Industry Experts Feel "Post demonetisation, the growth of digital banks in India has contributed actively to the rise of digital transactions"

By Baishali Mukherjee

Opinions expressed by Entrepreneur contributors are their own.

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It's been a year since Narendra Modi Government rolled out demonetization to weed out corruption and black money from the Indian economy. How has it affected the business and the e-commerce industry as a whole? Here is what experts feel.

Kamal Nandi, EVP & Business Head, Godrej Appliances - The aftermath of demonetization lasted till the first quarter of 2017. The consumer durable industry de-grew by 40% in November and by 15% in December 2016 and by 3% in January 2017, he said.

There was no growth recorded for February and March, but sales picked up slowly in April 2017. However, the recovery of demand for consumer durables from the effects of demonetization must be discussed in conjunction with the impact of GST, which started to trickle in from May this year, he pointed out.

"We saw a boom in sales pre – GST implementation, riding on the offers levied by retailers, followed by a lull post the implementation. The industry has since recovered, witnessing marginal growth during the festive season, though short of our expectations," he added.

Navroze Dastur, MD, NCR Corporation India

The first seven months after demonetization were a huge challenge, and customers faced sever challenges as ATMs went dry for a considerable period. There was already a huge cash crunch as, nearly 86 per cent of the currency had been sucked out of the system, and the government had not remonetised its equivalent amount.

A year on, this has changed; now, nearly 90 per cent of the currency has been remonetised, Dastur stressed.

"Our transaction levels are back to pre-demonetization days (120-odd transactions a day across 1.10 lakh ATMs). We are currently at the same cash levels as we were before demonetization. We saw a major spurt in digital transactions during the demonetization period, but after the currency has been remonetised, there is a clear drop in digital transactions, with cash transactions having gained prominence once again and consumers still want to use cash and rely heavily on ATMs," he said.

Cash continues to remain the world's most trusted and fastest form of payment.

Kuldip Maity, MD & CEO, Village Financial Services

Microfinance industry was shaken by the sudden announcement. As this sector is cash-driven, the whole of it faced tremendous challenges in the first few months of demonetization. There were issues related to both loan disbursement and repayment.

It is heartening to watch the industry recovering fast, he said. "As we near the first anniversary of the withdrawal of 500 and 1000 currency notes, we have been able to overcome the initial impact of demonetization," he added.

"A recent analysis from MFIN suggests that the MFIs registered a decline in the number of clients, total loans disbursement and also a decline in average loan disbursed per account in the post-demonetization period, compared to three quarters in the pre-demonetisation period. But now there is recovery in sight in the coming quarters," he stressed.

Amid all these pains, we have to see the long-term benefits also. Post demonetization, technology, and digitization have now become a priority for MFIs, he said, adding digital transactions got a major boost. The whole industry is thinking about gradually going paperless.

Ram Sarvepalli, Partner and National Leader of Advisory Services, EY India

Last one year has seen significant growth in usage and adoption of digital channels for making payment transactions, he said. "Physical acceptance infrastructure at merchants has nearly doubled from 1.5 million POS terminals in October last year to over 2.9 million now. Debit cards, which were primarily used for cash withdrawal with less than 8% usage at POS pre-demonetization (as a percentage of total POS spends and ATM cash withdrawals) spiked to 29% during the cash crunch phase (December 2016) and have now stabilized at 13-14% in a steady state," he highlighted.

The market has also seen significant innovation in payments space with direct institutional and regulatory support. "Post demonetisation, the growth of digital banks in India has contributed actively to the rise of digital transactions and we will continue to witness more and more services being offered by these banks with various solutions like mobile banking, e-wallets and virtual cards, among others," he said.

Furthermore, the linking of Aadhaar with the Public Distribution System (PDS) has been hailed as a major step to reduce pilferage of entitlements and also showcases the level of comfort that people in rural and urban areas have with the intervention of Aadhaar and other digital technologies.

Anshul Jain, Country Head and Managing Director, India, Cushman & Wakefield

Demonetization did create a drastic slowdown in development and construction activities and reduced the end-user activities in the sector, he said, adding, "However, demonetization, and other regulatory and legislative reforms in the India such as RERA, Benami Transactions (Prohibition) Amendment Act and GST have helped in structured development of the Real Estate Sector in the past one year. The immediate impact of these has been a significant rise in investment in real estate from PE and FIIs. The end-user sentiments and activities are slowly on the rise as developers are meeting their demand of creating more affordable and mid segment housing. Going forward, we feel that the market sentiments will turn positive and construction activity is likely to gain momentum."

Dr. Niranjan Hiranandani, President, NAREDCO

Past one year has been an eventful year and the real estate sector has experienced a roller coaster ride, he said. "There were ups and downs but fortunately things are on revival mode as of now. Past one year not only witnessed demonetisation but also other big policy developments like implementation of RERA as well as big taxation reform like GST. To be honest, all of these have had their own share of teething troubles, but fortunately so far things are under control. Demonetisation has led to greater efficiencies and transparency in the real estate sector and we welcome this. Just like their impact on honest taxpayers, these developments have helped the sector as well," he added.

Mayuresh Joshi, Fund Manager, Angel Broking

Over the past one year there were some sectoral losers and some gainers due to demonetization. "NBFCs and two-wheelers took a hit due to weak rural demand, following the liquidity crunch. However, private banks and the banking sector, in general, benefited due to the surge in deposits, which was duly reflected in the CASA rations. Sectors like electrical goods and textiles also benefited as the demonetization squeezed the unorganized sector a lot more," he added.

Interestingly, as one examines with a sense of perspective, the demonetization has done a lot of good for the economy, he clarified. "First, it has pushed India much faster towards digital adoption. Forget about the elegant statistics; the truth is your grocer baker, veggie vendor, chemist is more willing to accept digital money. Secondly, money that was idling with people landed up with banks giving a $100-billion boost to liquidity. It not only ensured full transmission of rate cuts, but also gave the RBI enough ammunition for rescuing banks via recapitalization bonds. Thirdly, the first step has been taken towards attacking black money," he added.

Ankur Aggarwal, MD, Crystal Crop Protection

Demonetization, the mother of all economic reforms, initiated by the Narendra Modi government, initially sent shock waves across the country. "As we look back a year later, we can repose our trust in the resilience of the Indian economy in general, and the agriculture sector in particular. Delays in payment to farmers because of cash crunch proved to be a temporary phenomenon. Fertilizer use showed a slump initially. But the decline in fertilizer consumption did not persist long. Today, sales are back to normal," he asserted.

To be fair, the drop in global fertiliser prices and shift towards bio-fertilisers has affected chemical fertiliser consumption more than the demonetisation move, he added. The growth story of the agrochemical industry is in-tact. In fact, there are immense opportunities for the agrochemical sector in the post-demonetisation era. "We anticipate remarkable changes once farmers shift to digital and cashless payments," he said.

Sumit Peer, Founder and CEO, Aurelius Corporate Solutions (KSI) – "Demonetization was a move which hardly any other leader in the world could dare to take. It reinvented the formula of political will and determination of an honest politician," he said.

"This not only helped clean black money but also helped restore the image of Indians and Indian politics, which had taken a serious beating in the past. A parallel thriving black money economy is halted and has helped check the price rise and inflation, making life and resources available to common man at a sustainable and affordable price," he said.

"Our business has improved a lot as training opportunity on ERP customization and automation of home grown CRM solutions came in. We have seen a good demand on programs like SAP- GST from all segments for the market," he added.

Rahul Garg, CEO & Founder, Moglix, a Ratan Tata-backed B2B e-commerce Company

The policy of demonetization, at this time last year, had given a much-needed digital push to our economy. It was a preparing ground for the reform of One Country, One Tax (GST) and a boost to the government's Digital India, he said. The reform has evaded the unorganized players in the market pushed the organized players to meet the trends of digital consumption. Consumers in both B2C and B2B space are more digital savvy and opting for hassle-free methods of transaction. Digital technology and digital-based governance are now taking a forefront.

Baishali Mukherjee

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