The Centre’s move to scrap old notes of Rs500 and Rs1,000 and the cash crunch that followed has in one month achieved what the state has been trying to for years — has brought down sales of cars and two-wheelers and reducing congestion and pollution in the long-run.
The shock announcement triggered frenzy among Indians as the high-value banknotes that were discontinued made up 86% of the currency in circulation. The panic was evident in, among other things, the number Mumbaiites who bought and registered vehicles in the month that followed. Data for November from Mumbai’s four Regional Transport Offices (RTOs) show 1,902 fewer cars and bikes were registered compared to the same month in 2015. In November 2016, Mumbai’s RTOs registered 17,724 vehicles —4,334 four-wheeler (cars, jeeps and SUVs) and 13,390 two-wheelers (motor cycles, mopeds and scooters). RTO sources said a few days after the announcement, vehicle registration started declining gradually.
“As several people had booked vehicles before the announcement, vehicle registration did not get hit immediately. But in the course of the month, it has seen a substantial drop,” said a senior RTO official.
“With no money in their pockets, people are not buying new vehicles. Even processing of loan files from the banks has come down, affecting vehicle sale,” said another RTO official, not wishing to be named.
November saw overall car sales dropping by 50% according to auto dealers, who did not want to be quoted. They said people have put vehicle buying plans, especially cars, on hold owing to the cash crunch. RTO sources also said registration of two-wheelers in comparison was less impacted by demonetisation. This is because popular bikes cost less than Rs1 lakh, and several people used old notes to make their purchases.
Mumbai has more than 27 lakh vehicles, and on average, 825 cars and two-wheeler get registered at RTO offices every day. According to RTO officials, even monthly revenue that includes vehicle tax, various fees, and fines, also dropped after demonetisation.