Demonetisation, GST haunt Kolkata's Burrabazar

Empty bylanes of Burrabazar, which are otherwise busy ahead of wedding season. Photo: Subrata Majumder
Almost a year since the note ban, Kolkata’s Burrabazar — one of the largest wholesale markets in Asia — is still reeling from its aftershocks. 

Prime Minister Narendra Modi had announced the demonetisation of old Rs 500 and Rs 1,000 notes on November 8 last year. But, even now, sales at Burrabazar are yet to recover to half the levels at which they were before.

Immediately after demonetisation, which sucked out 86 per cent of the cash in circulation, business had fallen by 50-90 per cent in different parts of Burrabazar. The wholesale market comprises 25 submarkets or katras that supply goods to much of east India.

Since then, the market has not had an opportunity to recover. The roll-out of the goods and services tax (GST) on July 1 this year was another major disruption.

With sales falling to almost nil, some wholesalers are planning to down shutters.

“Retailers are not buying from us and supplies from other states have come down by more than 50 per cent in the last two months. People are scared of the huge amount of paper work. There is a sense of terror among retailers,” said Biswajit Saha, president, Rajakatra Byabsayi Samiti.

At Posta Bazar, another sub-mart for perishable commodities, turnover has come down by at least 40 per cent in the last two months, said Shyam Sundar Agarwal, chairman, Posta Bazar Merchants’ Association. It has nearly 450 members. 

“Till now, business was carried out informally. But now, all of a sudden, some of the small traders are required to use computers for even a minor transaction.  Moreover, with cash transactions not allowed above Rs 10,000, traders are having problems in even paying transporters and porters, who only want cash, as they are daily wage earners,” Agarwal added. Recently, members of the Posta Bazar Merchants’ Association met Finance Minister Arun Jaitley to discuss the problems they were facing.

Other merchants in the area corroborated the claims of business slowdown.

Govind Agarwal has been running a wholesale spice shop in Burrabazar since 1978. He claimed he had never experienced such a slowdown in his life.

“If I keep an accountant, I would have to spend at least Rs 25,000 as monthly salary. Even for small things such depositing cash in banks, traders are being harassed. On top of that, there is no demand [for goods],” said Agarwal.

The worst hit are the small traders, who don’t have permanent shops but operate out of makeshift structures or carts.

Mohhamad Abbas, a toy seller, used to earn about Rs 250-300 per day till October last year. Now, his daily earnings have come down to Rs 70 a day. 

“Due to lack of supply of Chinese toys, stocks are down by 75 per cent,” he said. “Electric toys attract 18 per cent GST against the earlier 12 per cent VAT (value-added tax). Other toys attract 12 per cent GST against 5 per cent VAT. Prices of various plastic products have increased by about 25-30 per cent due to the GST, forcing shopkeepers to raise prices.  But demand remains low. So sales have almost stopped.”

Another trader, Mohammad Heera deals in tarpaulin. His daily sales have fallen from Rs 2,000-2,500 per day to less than Rs 500-1,000. Prices per unit have gone up by Rs 200. 

Bag seller Mohammad Mustaq has to now wait till 1 pm to get his first customers. Demand for his goods has come down by 50 per cent. 

Digitisation was one of the motives for demonetisation. Burrabazar has, however, has firmly resisted a move away from cash. In the past year, not even 5 per cent of the business had moved to digital means, said market insiders.

Yogesh Kumar Sonthalia, a textiles merchant in Burrabazaar, said he had attempted to route transactions through Paytm soon after demonetisation last year. However, his buyers have been refusing to use Paytm, with transactions through it remaining close to nil. Meanwhile, sales have crashed by 30-40 per cent in the last two months due to GST. Another cloth merchant, Navin Harlalka, said his margins fell by half in the last one year, from about 10-15 per cent to 5-7 per cent at present. Like most others at Burrabazar, he is waiting for normalcy and praying that there are no more disruptions.

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