Sudden demonetisation of Rs 500 and Rs 1,000 notes has caught everyone nervous and confused in Madhya Pradesh’s commercial capital, triggering panic buying that continued past Tuesday midnight.
Within hours of Prime Minister Narendra Modi’s announcement to this effect, buyers and sellers suddenly turned active in the business districts of Indore, considered to be India’s one of the fastest-growing non-metro cities, where people have good purchasing power.
“People purchased gold, jewellery worth more than Rs 100 crore within four to five hours of PM’s announcement,” Hukumchand Soni, president of MP Sarafa Association told HT, adding that most of the panic buyers went to their known jewelers in Indore to be doubly sure about their “quick purchase” with the stacked money.
Soni said the Tuesday night sale was a belated Diwali bonus for the industry. “None of the buyers wasted time to bargain, and most of the buys was in the form of gold coins, biscuits and bars,” he said.
According to the members of the Sarafa Association, the quick sale on Tuesday night was almost seven times of their last Dhanteras sale of around `15 crore. Soni said the sale could have been much higher had people knew about the demonetisation decision by early evening.
Indore district administration forced the jewellery shops to close down after mid-night as people were thronging all the outlets. “We had to force some of the showrooms to close at 1.00 am today at MG Road at Sarafa (jewellery) market here,” District Collector P Narhari said. Usually, the jewellery shops at the Sarafa market generally pull down shutters in between 9pm and10 pm. Narhari said the shops had to be closed to maintain law and order.
There are reports that more and more people are now approaching jewellery shops in Indore to help them with back-dated purchases. However, Soni refused to comment on the matter even as the members of the association held meetings on Wednesday to analyse the sudden boom in the market.
Professionals, businessmen also consulted their chartered accountants and financial experts to explore safe parking of savings and understand nuances of the PM’s declaration.
The biggest sufferer of the government’s move will be Indore’s real estate industry that controls roughly around 50% of the entire Madhya Pradesh’s business in this sector.
Atul Jhanwar, Indore unit secretary of CREDAI, an association of builders and brokers, admits there would be short-term setback.
Secretary Tax Practioners’ Association, Indore and chartered accountant Vikram Gupte said the move will hit trade and commerce initially but it will help in long run because GST, which is to be introduced from next financial year, emphasises on transparency in financial transactions.
Members of other trade bodies and economists too believe the decision will not have an adverse impact in the long run as 90% of wholesale business transactions is carried out through banks.
Head of Indore School of Economics Dr Ganesh Kawadia said, “The decision will boost banking sector bringing almost all transactions under banking system. It will also bring into circulation money lying dormant with people.”