Most of India’s business environment has been tremendously shaken up by the recent demonetization of the higher currency notes by the Modi government. This is the third demonetization exercise undertaken by the Indian authorities, if we include the one done just before independence in 1946. It is still too early to accurately gauge the depth of the shakeup this has caused, but its impact on the real estate sector is immediately visible.

Since Modi’s surprise announcement, the ripples have been spreading through the already disturbed sector, which has been experiencing excruciatingly slow growth in recent times.

Poor sales leading to almost flat prices, heavy liquidity challenges and high unsold inventory have all colluded to keep logistics sector away from fulfilling its potential.

As Indian retail segment generates a lot of cash transactions, there might be reduction in the sales over the next one or two quarters. However, the impact is felt more by the small traders and the unorganised retailing segment, rather than the organised retailers. Some sectors like jewellery and the luxury segment have been impacted more than others and will doubtlessly take much longer to revive. However, the use of plastic money and transactions through online payments will continue to release the money into the retail market.

In the medium-to-long run, domestic consumption will be stable owing to India’s strong economic base and favourable demographics. Also, as more retailers encourage alternative/digital payment solutions, the market ecosystem will become more transparent and structured going forward.

Amit Mittal of OmKiran Warehousing, said about the impact of Demonetization on the Indian Logistics sector.

Demonetization has resulted in visibly reduced low footfalls, but this effect is temporary and will turn around in few weeks as more money circulate in the system and will improve the purchasing power appetite of the consumers.

“From now on every penny will be used for productivity”, said by Amit Mittal will be the upcoming future of Indian Logistics.