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Demonetisation: 35 per cent job losses, 50 per cent revenue dip, says study by largest organisation of manufacturers

The study, conducted by AIMO, has also projected a drop in employment of 60 per cent and loss in revenue of 55 per cent before March 2017.

Written by Arun Janardhanan | Chennai | Updated: January 9, 2017 12:26 pm
demonetisation, demonetisation effect, jobless, no jobs, revenue dip, small scale industries loss, company loss, AIMO, all india manufacturers organisation, SME, indian express news india news This was the third such study conducted by the AIMO on the impact of demonetisation and was circulated among members last month. (Representational image)

In the first 34 days since demonetisation, micro-small scale industries suffered 35 per cent jobs losses and a 50 per cent dip in revenue, according to a study conducted by India’s largest organisation of manufacturers.

The study, conducted by the All India Manufacturers’ Organisation (AIMO), has also projected a drop in employment of 60 per cent and loss in revenue of 55 per cent before March 2017. The AIMO represents over 3 lakh micro, small scale, and medium and large scale industries engaged in manufacturing and export activities.

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The study stated that almost all industrial activities have come to a standstill, with the Small and Medium-sized Enterprises (SMEs) sector worst-hit. “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,” said the study.

This was the third such study conducted by the AIMO on the impact of demonetisation and was circulated among members last month. A fourth study is expected soon.

Among the major findings of the study are:

# Medium and large scale industries engaged in infrastructure projects, such as big-ticket road construction, reported a 35 per cent cut in employment and 45 per cent revenue loss. The number of jobs and revenue are expected to dip by 40 per cent by March.

# Medium and large scale industries, including foreign companies, engaged in export-oriented activities reported 30 per cent job losses and 40 per cent revenue fall. This is likely to be 35 per cent and 45 per cent, respectively, by March.

# In the manufacturing sector, medium and large scale industries reported the least job-losses in the first 34 days (5%) and took a revenue hit of 20 per cent. This dip is likely to be 15 per cent for both by March.

According to the study, the factors that contributed to the impact are: zero cash inflow, rules curtailing cash withdrawals, staff absenteeism, a weaker rupee, choked fundraising options, inability of banks to work on proposals, derailed real estate sector, fear among foreigners, poor preparedness, and uncertain status of GST.

K E Raghunathan, national president, AIMO, said the studies were conducted by an expert committee set up by the organisation. He delined to provide details of the committee but said that it includes industrialists, SMEs and export sector experts, chartered accountants, consultants and lawyers.

Raghunathan said that AIMO had sent periodical reports about their findings to the Union commerce and finance ministries, on November 12, November 25 and December 12. “Unfortunately, there was no response of acknowledgement or reply from these ministries. Since the study is extremely critical of the Centre’s failed plan, we are unable to reveal the identity of the experts preparing these reports,” he said.

Referring to the government’s approach, Raghunathan said, “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,” he said.

The AIMO represents about 13,000 direct members and 3 lakh indirect members in India, including nearly 3,000 industries and associations in Maharashtra and 1,200 in Tamil Nadu.

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  1. Vinod Dawda
    Jul 17, 2017 at 1:42 pm
    Wonder how much the job loss was in the illegal economy that fuels the black economy. Perhaps a huge chunk. How much of this job loss moved to formal economy. Statistics and its interpretations are no better than the data collection methods. Most economists of repute and astrologers are great in their pronouncements.
    1. U
      Ulhas Desai
      Jan 9, 2017 at 3:37 pm
      I am job less. Bekari bhatta do immediately nahi to khursi khali karo.
      1. U
        Ulhas Desai
        Jan 9, 2017 at 3:32 pm
        Modi give jobs earnings..
        1. O
          Onkar Singh
          Jan 10, 2017 at 3:29 pm
          Only a politician like Modi can survive in such a situation without money because everything for him is paid by the state.But all those engaged in small business need money to run their business.Without money they can't take work from their employees,employees need money for their survival.With a cap on withdrawal of money,the economy has to slow down.The Indian Express likes to carry the article of how bad things are,but is afraid of bad comments on the bad situation the country is ping through so that the paper can get a Bharat Ratna on 26 January 2017!!!
          1. P
            Jan 9, 2017 at 9:05 am
            Shameful article by shameful organization on instruction of shameless masters.
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