For India’s jewellers, business yet to recover from slump

Bloomberg

For jewellers in the world’s second-largest gold market, business is yet to recover from the slump that followed India’s decision to ban high-value currency notes a year ago. Ask Bachhraj Bamalwa, who has spent four decades in the industry.
As PM Narendra Modi prepared to address the nation last November to announce demonetisation, Bamalwa was busy wrapping up a quiet and uneventful day.
What followed was a barrage of calls from his wealthiest customers, requesting Bamalwa to open his shop and sell his stock in exchange for their old notes, a risk he wasn’t willing to take.
“It was a night we can never forget,” Bamalwa said.
A year back on November 8, Modi decided to turn 86 percent of currency into worthless paper to curb corruption, crack down on unaccounted wealth and catch tax evaders. While liquidity has improved since, as Indians deposited 99 percent of the void bills, jewellers are still not happy as continuing efforts to curb the cash economy have hurt their business the most, they say.
Add to it the drop in disposable incomes thanks to slowing economic growth, which is now at a three year-low, and a disruptive roll out of the goods and services tax, also known as GST, in July this year.
“November 08 was the last day a jeweller may have smiled, after that he has been crying,” Ketan Shroff, joint secretary at the India Bullion and Jewellers Association Ltd., said. “It was a double hit for the industry with the demonetisation and then the GST, so things will take more time to get streamlined.” Gold demand in India tumbled to the lowest in seven years in 2016 to 666.1 metric tons.