GUWAHATI, Nov 17 - Due to poor banking system in the North East, the region has been hit most by the demonetisation of high denomination notes, the Federation of Industry & Commerce of North Eastern Region (FINER) said today. The industry association, however, welcomed the move by the Central government as it will help the nation�s economy in the long run.
According to the association, trade activities in the region have slumped by about 25 per cent in the wake of the demonetisation move.
�Small time traders in the region, mostly in the unorganised sector, have been hit by the move, but this is a temporary phase. It is a bold step by the Centre but the follow-up has to be done,� FINER president Pabitra Buragohain told a press conference here.
Small traders in the region are mostly dependent on cash transaction and this section has been hit most due to the poor banking penetration in the region.
�These set of people mostly depend on cash. They are not equipped to handle accounts. This needs to be addressed by the government. As we move towards a cashless society, the government needs to set up more banks in the Northeast, especially in the remote and interior areas. People in the interior areas are not even aware of the banking system,� he said, adding that the municipal bodies should initiate steps to ensure that all registered small vendors have bank accounts.
The industry body suggested that regular transactions of the small traders should be allowed to continue till they get aligned with the government move.
�The construction sector has also been affected hugely. In fact, it has suffered more than other sectors. Around 40 to 50 per cent of the work in this sector is done in cash. The government should come up with more infrastructure projects to make-up for this loss,� FINER vice president Bajrang Lohia said.
Stating that there would be a spurt in use of cheques now, the industry association also sought stringent laws to deal with cheque-bounce cases.
In a statement later, the FINER said necessary follow-up has to be done by the Centre so that there are no lapses in the exercise that aims to curb black money, corruption and counterfeit currency, and the benefits outstrip collateral damages which are bound to happen in a decision of this magnitude.
�This move to withdraw high-denomination notes is expected to dent immediate consumption, especially of high-end goods, but will have a positive impact on growth and inflation in the long run. Sectors with a sizeable magnitude of cash transactions are expected to get adversely affected. The government must devise effective measures to reduce the problem being faced by the common people,� it said.
