A historic message was sent on the evening of 8th November, 2016 when Indian Prime Minister, Narendra Modi made the announcement that the old 500 and 1000 notes would be banned from the midnight onwards. It was a big decision as stopping a currency which was believed to be having around 86% share in total currency circulation in India needs a lion’s heart.
No doubt, there were inconveniences to common man and businesses also had a tough day due to the reduced purchasing power of customers with this demonetization move. It is not difficult to understand that “Less hard cash with people means fewer product sales and conversion rates.” We performed the detailed analysis of this demonetization drive on the various business sectors. Here are the 5 business areas that were badly affected by this current financial scenario.
1. Real Estate-
We all know that the most real estate businesses are done “under the table” with cash directly given to the builders or sellers with the rest amount to be settled later on. Here, the buyers can pay as low as 20% to as high as 80% in cash for possessing their homes. Apart from this, it is now no secret that black money is strategically pooled into the real estate sector to escape the IT tax radars.
With the ban on 500 and 1000 notes along with the uneven distribution of new currency notes, the hard cash will find time for its smooth circulation. This demonetization drive has reduced the demand for property in the market and has further decelerated the investment in the real estate sector. With a hammer on the black money, it will be difficult to attract genuine home buyers as black money holders used to utilize their money on posh and luxurious properties. However, there is still one way out of it. You need to start looking out for a reputed SEO services company that can spread the good business reputation of your real estate company for grabbing maximum home buyers.
2. E-Commerce-
This business sector has seen mixed response against this demonetization drive. While eCommerce players like Amazon, Flipkart, Snapdeal, Jabong, and others reported a loss of 60 to 70 percent sales that were accounted to cash on delivery (CoD) option. Other eCommerce companies related to the digital wallet and payment options had a great day under this demonetization move.
Digital payment companies like Paytm witnessed a huge surge in their businesses growth. Since 9th November, the company has seen a whopping 700% increase in the overall traffic on the platform and 1000% growth in the value of money added to Paytm accounts. Similarly, another digital wallet company, MobiKwik witnessed an additional 200% downloads for the last few days, while including 2,00,000 users every day on their system as reported by ET. It is advised that if you are an eCommerce services owner, you need to encourage your visitors to go for digital payment systems for optimizing your conversion rates and sales.
3. Gold and jewellery sector-
With this sudden ban on 500 and 1000 notes, the gold market saw a great jump as black money holders started buying gold in return of the old currency notes. The demonetization move made this precious yellow metal more costly than ever with rates surging as high as Rs 40,000 to Rs 50,000. With this ban, the sales of the gold soared by 50 percent as compared to any other day and the sales were more than what occurred during the Diwali and Pushya Nakshatra as per the statement of Sarafa Association Members.
However, the situation may change in this business sector as Government gave hints that the gold sales during the period of 9th November till the normalization of the situation will be closely monitored. Contrasting this situation, the eCommerce companies dealing with jewellery business were hit due to the ban on Cash on Delivery (CoD) method which is the most preferred method for jewellery purchases.
4. Banking and financial sector-
With the ban on old currency notes along with the limited time period for cash exchange and deposits, banks and other financial institutions are having a great time. People are queuing up in great numbers and a lot of cash is being deposited in the bank within a short time period. Apart from this, the limited cash supply will urge people to use debit and credit cards for transactions, thereby further increasing the bank revenue. It has also increased the use of net banking facility by consumers since this demonetization move.
5. Stock Market-
This business segment will also feel the heat of the sudden ban on currency notes of 500 and 1000 monetary value. This is because all the commodity transactions in the general cash market are having a tough time due to this financial crunch. The limited cash supply has made the stocks of commodities like real estate, steel, mining, cement and others to suffer considerably as they are mostly dependent on hard cash transactions. With the circulation of new currency notes, the stock market will automatically improve for these business areas. Apart from this, do invest your money in the stock market through routes like short term investment plan (SIPs), mutual funds, flexible investment plans, and other such investment options for optimum survival in this demonetization scenario.
If you are trying to invest your hard earned money into some business sector, it is important to take a quick look at this write-up. You need to be vigilant enough to make the effective utilization of your investment. By putting your money into the right business areas, you can effortlessly improve your sales and conversion rates without any hurdles.
