A month after the Centre decided to demonetise the old Rs 500 and Rs 1000 banknotes, business at Sarafa market — Indore’s gold jewellery hub — has dropped to 20% of its previous average sales, say jewellers. After an initial spurt in jewellery sale following the move, Sarafa market has been subdued due to liquidity crunch.
“Despite the ongoing wedding season, sales are at around 20% of the average sales for this time of the year,” Indore Sona Chandi Jawaharat Vyapari Sangh president Hukumchand Soni told HT. “The problem is that people are short of cash and so are unwilling to spend on jewellery.” At this time last year, the daily turnover at Sarafa market was about Rs 4-5 crore, which has now come down drastically.
On November 9, there was a huge rush to buy gold and some jewellers sold the precious metal at prices 50% higher than the going rate. “Most jewellers made a killing for a few days, but we always knew about the adverse impact in the medium term,” said a jeweller, requesting anonymity.
Apart from the prices, customers are a bit hesitant to buy jewellery in cash as they are scared of income tax scrutiny, say sources. Earlier, people buying jewellery above Rs 2 lakh in cash had to produce their PAN card, but under the new norms, jewellers have to keep records of client details for purchases made in cash even below Rs 2 lakh.
The demand for gold jewellery has also remained subdued this year due to other factors, including high gold prices. However, even though gold prices have come down to Rs 28,400 per 10 gram from a high of Rs 31,700 per 10 gram in November, there are few buyers.