NEW DELHI: The recommendation of the Supreme Court-constituted special investigation team (SIT) to ban cash transactions above ₹3 lakh and capping cash holdings of companies and individuals at ₹15 lakh will be detrimental for India’s traditional economy, according to a leading traders body.
The Confederation of All India Traders (CAIT), which represents 60 million traders, said if implemented, the recommendations will get back inspector-raj and create pressures on credit availability making it difficult for businesses to sustain.
Traditional markets such as Chandni Chowk in New Delhi and Bara Bazaar in Kolkata are expected to be worst hit as they are heavily dependent on cash.
“Another reason why traders heavily depend on cash is because they want to avoid banking services, due to limited workforce, increased cyber crimes and poor digital connectivity,” said Radhey Shyam Maheshwari, a grain trader in Bhopal.
“The rider of seeking permission from the area income-tax commissions will bring back inspector raj and add to corruption. Now we will have to deploy one person for this purpose itself, which is an added cost and will lead to unnecessary harassment,” said a Telangana-based FMCG distributor.
“Borrowing money for a few days from a fellow trader to keep the payment cycle going is one of the most common features of our business. This runs into lakhs of rupees, though the money is withdrawn from the bank, the borrower receives it in cash. With the new rules this will become an illegal activity,” said Pramod Bhagat, who runs a hardware business in Surat.
{{/usCountry}}“Borrowing money for a few days from a fellow trader to keep the payment cycle going is one of the most common features of our business. This runs into lakhs of rupees, though the money is withdrawn from the bank, the borrower receives it in cash. With the new rules this will become an illegal activity,” said Pramod Bhagat, who runs a hardware business in Surat.
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