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Uttar Pradesh seems worst affected by the demonetisation crisis. Its political fallout now
threatens to derail BJPs chances in the big battle of 2017 if the situation persists into
the new year. Delhi with 1.2 cr people has 9,070 ATMs while Maharashtra with 11 cr
population has nearly 25,000 ATMs.
Demonetisation completely stalled the market for a couple of weeks, which led to
increased inventory and the only way to correct the inventory is through production cuts
and plant shutdowns. Instead of giving higher discount later (to clear inventory), carmakers and dealers want
to end the year with adequate inventory to start the New Year on a better note financially.
An investigation by the IT department has revealed that dormant Jan Dhan accounts are now flush with funds. Bengal
now has second-highest deposits in the poor mans accounts. Since West Bengal lacks big industries and big
businesses, the cash accumulation in Jan Dhan accounts show involvement of the political parties.
Well, Modiji has shown the way to the world how to tackle terrorism by way of demonetisation. Terror-hit countries all
can now emulate Indias demonetisation to easily solve the problem of terrorism, Thackeray said addressing a rare
press conference in New Delhi on Thursday. Right in the beginning we had said the demonetisation should not
cause hardship to people. Modiji said everything will be fine after 50 days. Thirty days have gone. Now wait for 20
more days for ache din,
Thanks to a series of QEs since then, emerging markets have received billions of dollars.The monetary stimulus has
been withdrawn and now the Fed is in the process of raising rates. Thi .. Higher US interest rates tend to depress the
values of emerging market currencies against the dollar. This comes at a time when many EM economies are already
weakening and their currencies have already slumped against the greenback. The Fed's rate hike has the potential to
start a currency drag.
3. Why should it affect foreign capital flows into EMs?
If the Fed raises rates, it could result in money flowing back to the US, resulting in strengthening of the dollar. A
stronger dollar is likely to deter FIIs from making fresh investments. So, in theory , a series of rate increases by the
US Fed is not good news for EMs like India.
fmcg
With unsold inventory piling up with wholesalers, who mostly deal in cash to supply to traditional trade, and
consumers spending less due to liquidity crunch, fast-moving consumer goods (FMCG) makers are bracing
themselves for a short-term blip in sales. FMCG companiesa re cutting down production by 10-20%.. While makers of
discretionary products such as chocolates and biscuits are hit the most as consumers look to preserve cash in hand
and are spending mostly on necessities, others too are feeling the heat.
Companies have started aligning production with demand. The cut in production will be dynamic based on real-time
demand analysis and will be across categories. We have to resort to such a strategy till the situation normalises since
consumers are postponing their purchases, Emamis Agarwal said.
Traditional trade, which account for about 72% of FMCG sales, typically transact in cash and at present more than
two-thirds of kirana stores are having a hard time buying stocks from consumer goods distributors. With the squeeze
on both purchases and sales, business is down for nearly 70% of the neighbourhood outlets in the past few days,
market researcher Nielsen said in a report on demonetisation last week.
"Demonetisation of high value currency note initiated by the government is a positive move for the economy and
industry and will lead to better transparency and compliance in the medium to long run. This will be beneficial for
organised FMCG players creating a level playing field," Dabur Ltd said a regulatory filing.
Elaborating on the impact, the company said it will vary across channels and geographies and stress is highest for
wholesalers and small town grocery shops, who are facing a severe liquidity crisis and are de stocking.