Demonetization is worrisome for MSMEs: KASSIA

Bengaluru, Dec 1 (KNN) Hailing the intention behind demonetization to curb black money menace, industry body for MSMEs Kassia has said the move, however, is causing enormous difficulties for the MSMEs.

“The enormous difficulties caused in implementation, putting everyone in a quandary, are causing considerable damage,” KASSIA said in a release.

This has badly affected rural areas, micro and small enterprises, small business and every citizen resulting in loss of man hours and waste of time in  front of the banks and ATMs, Kassia President A Padmanabha said.

He said SMEs in particular have been affected badly in the absence of cash for the payment of wages and raw-material purchase .  By very nature, these industries are heavily dependent on cash for payment of wages as most employees either have no bank accounts or normally are paid in cash.

KASSIA has made number of suggestions to the Government to increase the availability of cash to SMEs through banks so that they can pay wages and salaries, as these have to be paid statutorily  and otherwise in time.

“We have also urged the Government and RBI that the supply of 100 Rupees notes and smaller denomination notes must be greatly increased to ease the situation. The Government must also ensure that ATMs become functional as most of them have completely dried up in addition to not being recalibrated.  Men have to wait for hours at bank branches,” KASSIA said.

They must also have point of sale machines installed for distributing   essential commodities if feasible and also have mobile ATMs or quickly install ATMs in places where MSMEs are heavily concentrated such as Peenya, Kamakshipalya, Rajajinagar and also in the rural areas and districts in industrial concentrations, it said.

A serious worry is that the shortage of liquidity in the  system should not lead to serious  contraction of production which will largely bring down GDP growth as feared in some quarters and likely to have a ripple effect on the entire economy.

Kassia has urged the Government to increase the supply of smaller denomination notes and recalibrate ATMs on a war footing and install ATMs in targeted areas such as the important business hubs and SME industrial areas and the district and rural areas so that  people can, hopefully, access them.

While the need for taking hard measures to address black money , corruption etc., cannot be questioned,  it is necessary that the consequences must be anticipated and addressed with the necessary speed, urgency and diligence, the industry body said. (KNN Bureau)